Ferrari’s Electric Vehicle Push to Weigh on Shares, Goldman Says

(Bloomberg) -- Ferrari's (NYSE: RACE ) plan to go green could be costly for investors in the short term, according to Goldman Sachs (NYSE: GS ) Inc.

The broker flipped its recommendation on the supercar maker to sell from buy Monday, citing the firm’s efforts to launch a battery-powered vehicle by 2025, alongside weaker volume expectations for existing models.

“While we would view any Ferrari push to be at the forefront of evolving technologies positively in the long-term, for investors today, the transition brings uncertainty around potential future capital expenditure requirements, and their implications for earnings and free cash flow,” analysts including George Galliers wrote in a note Monday.

Goldman lifted its estimate for Ferrari’s capital spending by 42 million euros ($51 million) a year on average through 2030. Still, the broker sees the EV push as necessary for future growth. “While the internal combustion engine and chassis and suspension systems have been core automotive technologies in the past, it is clear that a very different set of technologies will be core technologies in the future,” the bank wrote.

The appointment of Benedetto Vigna from chipmaker STMicroelectronics NV as chief executive officer further demonstrates the company’s commitment to the technology transition, Goldman said.

Ferrari shares slipped as much as 2.9% to 168.90 euros on Monday, taking their year-to-date decline to about 10%.