Ferrari (RACE) Gears Up to Retest Trendline Resistance

Ferrari N.V. (RACE) shares rose more than 5% during Tuesday's pre-market session after the automaker posted better-than-expected bottom-line results during the third quarter.

Key Takeaways

  • Ferrari shares rose more than 5% during Tuesday's pre-market session on better-than-expected third quarter results.
  • EBITDA rose 6.4% to €330 million during the quarter, which surpassed analyst expectations due to a favorable mix and cost management.
  • The stock moved toward trendline resistance during premarket hours, and traders should watch for a breakout from $190.20 as a sign of trend reversal.

Third quarter revenue fell 3% to €888 million, missing consensus estimates by €10.21 million, but GAAP earnings per share (EPS) came in at €0.92, beating consensus estimates by €0.12. EBITDA rose 6.4% to €330 million during the quarter, which was higher than the €302 million consensus estimates thanks to a favorable mix and cost management. Management expects full-year adjusted EBITDA of €1.125 billion, which is slightly higher than the €1.11 billion that analysts expected.

Chart showing the share price performance of Ferrari N.V. (RACE)
TradingView.com

From a technical standpoint, the stock rose toward trendline resistance at $190.20. The relative strength index (RSI) remains neutral with a reading of 47.30, but the moving average convergence divergence (MACD) could see a near-term bullish crossover. These indicators suggest that the stock could have room to run if it breaks out from key resistance levels.

Resistance, or a resistance level, is the level at which the price of an asset meets pressure on its way up by the emergence of a growing number of sellers who wish to sell at that price.

Traders should watch for a breakout from trendline resistance toward prior highs of $195.00 or $200.00 over the coming sessions. If the stock breaks down, traders could see a retest of support levels near $175.00 or to the 200-day moving average at $170.93. A further breakdown could see a move toward Fibonacci support at $164.51.

The Bottom Line

Ferrari shares rose more than 5% during Tuesday's pre-market session after the company posted better-than-expected bottom-line results during the third quarter. In addition to better-than-expected third quarter EBITDA, management projected full-year EBITDA to come in above consensus analyst estimates.

The author holds no position in the stock(s) mentioned except through passively managed index funds.

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