CASE ASSIGNMENT
You are a financial analyst at a leading mutual fund company. Ferrari has just completed its IPO, opening at S52 per share in the U.S. Your boss is concerned that the stock's initial performance may be more related to IPO hype than fundamental value and has asked you to carefully analyze the company and make a recommendation on its true value. To do this, you will need to replicate the baseline analysis provided in Exhibit 5 of the case and then conduct sensitivity analysis considering each of the major inputs to the model. To do this, first you will need to analyze the company's financial performance compared to other automobile manufacturers and consider whether Ferrari's long run growth is sustainable. At a minimum, your analysis should consider the following variables:
• the firm's future growth rates,
• its margins,
• investment in working capital,
• CapEx,
• terminal value, and
• Cost of capital
Prepare tables that show how the firm's estimated value changes as you vary the key inputs over relevant ranges. Finally, make and defend a recommendation for the actually fair value, in USD, of Ferrari.
https://www.dropbox.com/s/c2m9qj0efmlugph/FERR_Case.pdf?dl=0