UBS Downgrades Ferretti to Neutral on Weakening Yacht Demand, Execution Risks

UBS has downgraded Italian luxury yacht manufacturer Ferretti to Neutral from a previous Buy rating, slashing its price target to €3.15 from €3.70. The investment bank cited a softening luxury yacht market, slower order conversion, and execution risks under new leadership as key reasons for the more cautious stance.

Downgrade Rationale

The downgrade follows Ferretti's recent reduction of its 2026 guidance, which UBS noted has highlighted a difficult market backdrop. Analysts at the bank now see few near-term catalysts to drive the stock higher, despite what they describe as an "undemanding valuation."

In its report, UBS stated that while the stock's valuation at approximately 4x its 2027 estimated EV/EBITDA limits significant downside risk, the subdued momentum and earnings uncertainty are likely to keep the shares range-bound. The bank now anticipates broader consensus downgrades from other analysts following Ferretti's weaker outlook.

Financial Headwinds

Ferretti's second-quarter results underscored the market pressures. Management attributed the guidance cut to slower order conversion, pricing pressure, and weaker absorption of fixed costs. They also pointed to geopolitical uncertainty, particularly in the Middle East, and a macroeconomic environment that is lengthening customer decision-making processes.

Ad

Key figures from the second quarter include:

• Order Intake: €162 million, a decrease of 18% year-over-year.
• Net Revenue (New Yachts): €284 million, down 3% from the prior year.
• Adjusted EBITDA Margin: 15.4%, a decline of 50 basis points year-over-year.
• Net Backlog: €565 million at the end of June, down 22% from the previous quarter.

Analyst Outlook

In response to these trends, UBS has revised its financial models for Ferretti, cutting its earnings-per-share estimates by 13% for 2026, 10% for 2027, and 9% for 2028. The bank also highlighted potential execution risk as new Chief Executive Mr. Anastassov prepares to implement strategic changes.

While a strategy update is expected, UBS said it prefers to "remain on the sidelines until there is greater visibility on execution." Within the listed luxury yacht sector, the bank noted it continues to prefer competitor Sanlorenzo.