There's a lot of talk about the automotive sector and how we're experiencing a revolutionary time of electrification in that industry -- one that could create millionaires out of early investors. Tesla and its unique leader Elon Musk have become names synonymous with electric vehicles. And over the past year, Ford has been making its mark under new CEO Jim Farley as the revamped Mustang and F-150 truck transition to electric batteries to support their raw power.
Ferrari (RACE -1.04%) is one company that not only carries perhaps the best stock ticker symbol of them all, but is also gaining more traction in popularity and is becoming a brighter blip on the radar of investors. Let's look at what the company has going for it.
Image source: Ferrari.
2021 saw its largest number of vehicles sold in a single year
Looking at Ferrari's stock price change since November might lead investors to think Ferrari is not doing so well, declining by 20% from a high of $278 down to $224. But one listen to its recent earnings call tells a different story. While Tesla and Ford have seen their share of limelight related to electric vehicles, Ferrari has quietly been doing what it does best: selling high-quality supercars.
So if you're looking to compare Ferrari to Ford, don't bother. Yes, they're both automakers, but Ferrari is more focused on quality rather than quantity -- that's no dig on Ford. Ferrari operates in a completely different market segment. Its least expensive vehicle goes for around $226,000. And it doesn't take many of them to generate revenue of over $2 billion. In fact, Ferrari's 2021 full-year revenue totaled $4.8 billion, a 23% increase over 2020, supported by a company record number of vehicles sold -- 11,155 total for the year -- up 22% over the previous year. By comparison, Ford sold 1.9 billion cars in 2021.
That sales jump helped the company generate earnings that beat Wall Street's estimates by 12% for the second consecutive quarter, and the number of vehicles shipped has now grown in six consecutive years, along with an order book stretching into 2023 that CEO Benedetto Vigna describes as its strongest ever.
Entering the SUV market to extend growth
As Ferrari looks toward filling those orders into 2023, it also wants to extend its growth into new markets such as SUVs and electric vehicles. The company has stated that it wants to be carbon neutral by 2030, something similar we've heard from Ford and other U.S.-based automakers. In order to do that, it plans to have fully electric vehicles by 2025 to go along with its hybrid model released in 2019, which sells for a cool half a million dollars.
Manufacturing electric vehicles could be more acceptable to customers of Ferrari than offering SUVs. First off, Ferrari is not a name you might think of as synonymous with SUVs -- but believe it or not, in the SUV market for supercar automakers, Ferrari is playing a bit from behind and will face competition from Porsche, which released its first SUV in 2002, and from Lamborghini, which entered the market in 2017, along with Aston Martin in 2020.
Ferrari's entry vehicle into the SUV market is called the Purosangue. Though mum is the word related to its sales price and availability date, Vigna claims that the ride of the vehicle is astonishing and will exceed customers' expectations when it becomes available for purchase in 2023 (production will start this year). If Ferrari keeps in line with its historical inventory limitations, the supply will be tight, and if demand is strong, it will work in the company's favor for pricing.
A stronger model mix sets the tone for 2022
Building off of double-digit growth across all global regions, Ferrari heads into 2022 with a stronger model mix, including the Dayton SP3 and the SUV Purosangue. This should allow the company to meet the needs of customers looking for something more out of their Ferrari, as well as broaden its exposure to new Ferrari customers.
Analysts seem to be on board with the company's plans. Morgan Stanley has Ferrari listed as its top among electric vehicle stocks for 2022, and the average 12-month price target for all analysts covering the company is $294. That target price reflects a 31% upside from the current price of $224 -- just one of many reasons Ferrari is a buy.
