PARIS (Reuters) – Ferrari fell on the Milan Stock Exchange on Monday after Citigroup lowered its recommendation from “neutral” to “sell”, citing an expected slowdown in growth in 2024 for the Italian luxury car maker.

On the Milan Stock Exchange, around 09:45 GMT, Ferrari shares fell 2.6% to 382.20 euros compared to a decline of 0.04% for the FTSE MIB index in Milan.

As Ferrari’s current valuation is already high, a further increase is difficult to justify, Citi believes.

“We understand that equity markets are more focused than ever on ‘quality’ stocks and Ferrari could easily continue to rise and we could be wrong in our approach,” the analysts acknowledge in a note.

“But after a 30% rally since December, and a valuation close to 12 times revenue and 57 times expected profit for 2024, we believe it is rich and downgrade to sell.”

Citi raised its price target to 329 euros, a discount of 15% compared to the current price. “We cannot value Ferrari at 400 euros,” says the intermediary.

In 2023, the Italian manufacturer’s turnover increased by 17%, its earnings per share (EPS) by 36% and free cash flow by 42%.

Citi says Ferrari’s initial guidance for fiscal 2024 calls for only 8% to 10% growth in revenue, EPS and free cash flow

“Upward revisions to Ferrari’s forecasts have averaged around 10% since 2019 (excluding 2020), which would still mean a year of much slower growth,” Citi analysts say.

(Written by Augustin Turpin, with the contribution of Alessandro Parodi, edited by Blandine Hénault)

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