Italian luxury automaker Ferrari (RACE) experienced a surge in its stock price as it reported strong Q4 sales results that exceeded expectations, along with a positive profit forecast for 2024. The company's upbeat outlook is largely attributed to the continued strength in luxury demand. Furthermore, speculation is rife that Formula 1 legend Lewis Hamilton may be on the verge of a surprising move to Ferrari from Mercedes, adding to the excitement surrounding the brand.

During the fourth quarter, Ferrari reported revenue of 1.52 billion euros ($1.65 billion), surpassing estimates of 1.50 billion euros ($1.63 billion). This represented an 11% increase in sales compared to the previous year. While its adjusted EBITDA of 558 million euros ($606 million) fell just short of estimates of 560 million euros ($608.2 million), Ferrari's net profit for the year surged 34% to an unprecedented 1.257 billion euros ($1.3 billion).

Investors are particularly enthused by Ferrari's optimistic guidance for 2024. The luxury automaker anticipates revenue to climb to 6.4 billion euros with adjusted EBITDA of 2.45 billion euros ($2.64 billion), citing the anticipated continued strength in luxury demand as a key factor.

Ferrari CEO Benedetto Vigna expressed satisfaction with the company's accomplishments over the past year, which had bolstered its brand and led to exceptional financial results. Vigna stated that the record-breaking outcomes in 2023, combined with their ambitions for 2024 and strong order visibility, have given them greater confidence in achieving their high-end targets for 2026.

As part of its long-term goals for 2026, Ferrari aims for a product mix of 40% gas-powered cars and 60% hybrid cars, with an EBITDA target ranging from 2.5 billion to 2.7 billion euros ($2.72 billion to $2.93 billion) and an EBITDA margin of 38%-40%.

In terms of deliveries, Ferrari shipped 13,663 cars in 2023, representing a 3% increase compared to the previous year. Growth was primarily driven by strong demand in the Americas, which experienced a 10.6% increase in deliveries. Notably, the company attributed these gains to the popularity of its new Purosangue SUV and its 296 and SF90 hybrid sports cars. Additionally, Ferrari plans to launch its first full electric vehicle in the fourth quarter of 2025 and is constructing a new factory in Maranello dedicated to the assembly of hybrid and electric vehicles.

While analysts acknowledge Ferrari's tendency to provide conservative guidance, they maintain a positive outlook on the company. CFRA analyst Garrett Nelson reiterated his "Buy" rating on Ferrari and raised his price target to $385, highlighting the automaker's outstanding track record of surpassing earnings expectations.

Amidst Ferrari's impressive financial performance, speculation is swirling about a potential driver lineup change in its Formula 1 team, Scuderia Ferrari. Reports suggest that seven-time champion Lewis Hamilton is close to making a surprising switch from Mercedes for the 2025 season. Hamilton's contract with Mercedes extends until 2024, but he reportedly has an option to join Ferrari in 2025. Mercedes F1 team principal Toto Wolff is said to have notified staff of Hamilton's departure, with an official announcement expected in the coming days.

If the rumors hold true, Hamilton's move to Scuderia Ferrari would be a significant development in the Formula 1 world. With his seven championships and record-breaking number of race wins, Hamilton would be joining the most iconic team in the sport. Scuderia Ferrari, which has a rich history dating back to 1929, boasts 16 constructors' world championships but hasn't clinched the title since 2008.