Ferrari races higher as analysts get more bullish on growth

Saying that Ferrari (RACE) is "about to embark on a growth phase," Citi analyst Michael Tyndall upgraded the stock to Buy from Neutral. Meanwhile, his peer at Morgan Stanley raised his "bull case" for the luxury sportscar maker to $100, saying he believes recent strength in the share price could be a reflection of the market's assessment of the timing and success of a possible new model extension. VOLUMES OUTLOOK: Ferrari's volumes can double in a decade, predicted Citi analyst Michael Tyndall. He noted that sales volumes of Ferrari cars have doubled since 1997, while Porsche volumes have rocketed 700% during the same period. Moreover, the number of "wealthy individuals" has doubled since 1997, he noted. OTHER CATALYSTS: Ferrari's peers have developed more synergies between their models than Ferrari has, and the company can lower its costs and use its intellectual property more effectively by closing that gap, Tyndall argued. Additionally, Ferrari's CEO has said that the company is becoming "a lot more rigorous" about its costs, indicating that its margins will rebound, the analyst stated. Additionally, Ferrari can significantly increase its prices, he believes. ESTIMATE/ TARGET: Tyndall increased his 2017 earnings before interest and taxes estimate for Ferarri by 24%, placing it 7.6% above consensus levels. He raised his price target on the stock to EUR74 from EUR48. MORGAN'S BULL CASE: Ferrari could raise its earnings per share to EUR 5 by 2020 by raising its prices by 0.7-0.8 percentage points per year, increasing its sale volume to 13,500 units, and enabling its costs to rise in absolute terms but fall as a percentage of its sales, wrote Morgan Stanley analyst Adam Jonas. If its EPS does reach that level, its share price can reach $100, he believes. Jonas has an Overweight rating and $72 price target on Ferrari shares. PRICE ACTION: In morning trading, Ferrari rose 3.3% to $70.43 per share.