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Ferrari (RACE) to Begin EUR 150M First Tranche of Share Buyback

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Ferrari N.V. RACE recently announced that it plans to initiate a 150-million euros share buyback program as the initial tranche of the new multi-year share repurchase plan, valued at nearly 2 billion euros and expected to be implemented by 2026. The disclosure was made during the 2022 Capital Markets Day.

The first tranche will begin Jul 1, 2022, and end no later than Nov 30, 2022. It will be funded through RACE’s available cash, while the common shares repurchased under the First Tranche may be used to meet any obligations brought by Ferrari’s equity incentive plan.

The First Tranche has two parts. Firstly, Ferrari’s non-discretionary buyback agreement equivalent to 120 million euros will be executed in the EXM market through a bank. The bank will base its trading decisions on the timing of purchasing RACE’s common shares independently. It will act in accordance with the applicable rules and regulations, and the provisions of the Market Abuse Regulation 596/2014 and the Commission Delegated Regulation (EU) 2016/1052. Per the agreement, purchases may continue during any closed periods of Ferrari in keeping with the regulations.

Secondly, Ferrari intends to enter into an additional mandate with a primary financial institution for up to 30 million euros, which will be executed on the New York Stock Exchange (“NYSE”). Following such a mandate, RACE will provide the financial institution with purchase instructions, in tandem with applicable rules, regulations and legal requirements. The actual timing, number and value of common shares repurchased on the NYSE will depend on several factors, including market and general business conditions.

The First Tranche will implement the resolution adopted by the shareholders’ meeting, held on Apr 13, 2022. The meeting authorized the purchase of up to 10% of RACE’s common shares during the 18-month period. The repurchase authorization will expire on Oct 12, 2023, or until the time the authority is extended or renewed before such date.

The First Tranche replaces any earlier common share buyback program. Ferrari currently has 11,065,110 common shares in treasury.

Shares of Ferrari have lost 9.8% over the past year compared with its industry’s 47.8% decline.

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Zacks Rank & Key Picks

RACE carries a Zacks Rank #3 (Hold), currently. Some better-ranked players in the auto space are Wabash National Corporation WNC, Genuine Parts GPC and Standard Motor Products SMP, each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Wabash National has an expected earnings growth rate of 239.3% for the current year. The Zacks Consensus Estimate for current-year earnings has been constant in the past 30 days.

Wabash National’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed the mark in one. WNC pulled off a trailing four-quarter earnings surprise of 51.26%, on average. The stock has declined 6% over the past year.

Genuine Parts has an expected earnings growth rate of 13.6% for the current year. The Zacks Consensus Estimate for current-year earnings has been constant in the past 30 days.

Genuine Parts’ earnings beat the Zacks Consensus Estimate in all the trailing four quarters. GPC pulled off a trailing four-quarter earnings surprise of 11.34%, on average. The stock has risen 3% in the past year.

Standard Motor has an expected earnings growth rate of 5.2% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 3.1% upward in the past 30 days.

Standard Motor’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. SMP pulled off a trailing four-quarter earnings surprise of 40.34%, on average. The stock has increased 2.7% over the past year.


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