Morgan Stanley Picks Ferrari Over Tesla as its Top Auto Stock

Peter McGuthrie
2 years ago

Morgan Stanley has a new pick over Tesla for the top auto stock, with analyst Adam Jonas on Monday calling Ferrari the best buy and changing the firm’s price target on the Italian brand, according to a report from Markets Insider.

“We see Ferrari as the most defensive name in our coverage that avoids much of the EV hype and EV risk. An attractive risk/reward,” wrote Jonas in a note.

Jonas and Morgan Stanley raised price targets on Ferrari to $310 from $280, which would mark a 14-percent increase from the automaker’s stock close of $271.45 on Friday.

According to the firm, Ferrari’s electric vehicle (EV) opportunities are being underestimated, and the luxury automaker’s pricing power is strong, with a “near unmatched brand and market moat.”

“Building on their learnings from hybrid and applying the racing DNA, we believe Ferrari can offer an EV that will be just as high in demand as what investors are used to from [an internal combustion engine],” said Jonas.

“In our view, buying a Ferrari today is not so much about “the sound of the engine” or the “performance” in and of itself. Rather, we think it is a totality of factors that drive customers to want the elements that a Ferrari possesses: scarcity, desirability, connotations of luxury and performance (stemming from Formula 1 racing pedigree), and exquisite Italian design and engineering,” said Jonas, saying the Italian automaker is the “most recession-proof” car company.

Currently, Morgan Stanley has a $220 price target on Tesla, with the U.S. automaker’s shares trading at about $195 on Monday.

Last year, Ferrari announced it was targeting 80 percent of all company sales to be all-electric and hybrids by 2030, alongside plans to launch its first fully-electric vehicle in 2025.