Bernstein says tariffs 'do not break the Ferrari story'
Investing.com -- While the tenfold jump in tariffs on cars imported to the U.S. is not a factor that can be ignored, it 'does not break the Ferrari story,' according to Bernstein analysts.
U.S. President Donald Trump announced a 25% tariff on auto imports, effective from April 3, which places Ferrari (NYSE:RACE) directly in the line of fire due to its exclusive manufacturing presence in Maranello, Italy.
However, the investment bank remains optimistic about the luxury carmaker's ability to weather the new measures.
Ferrari's affluent U.S. customer base is likely to absorb the higher prices without significant pushback.
'As we estimate the majority of Ferraris sold in the U.S. go to owners who already own more than one Ferrari, any increase in new prices will be somewhat cushioned by the knowledge that the customer's other Ferraris in their garage have seen their values rise as well,' analysts including Stephen Reitman said.
Bernstein's analysis includes a tariff model that evaluates the effects of the tariff increase from the current 2.5% level.
If Ferrari were to absorb the entire 25% tariff, the investment bank estimates a 3.5 percentage point impact on Ferrari's EBIT margin and a €1.39 impact on earnings per share (EPS) for the year 2025.
However, Bernstein expects that Ferrari will pass most of the tariff cost onto its customers. With full pass-through, they predict no impact on EPS and only a 1.0 percentage point impact on EBIT margins.
'A 50% pass-through of a 25% tariff would have €0.70 impact on EPS and a 2.2pts impact on EBIT margins,' analysts added.
In conclusion, the sharp spike in tariffs is certainly 'unwelcome,' but it's unlikely to significantly disrupt Ferrari's strong market position or demand among its U.S. clientele, Bernstein said.
The firm suggests that even with double-digit price increases, Ferrari's allure among collectors will remain intact.
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