Fiat Chrysler found a magic formula with Ferrari — and it could use it on Maserati next

Sergio Marchionne
Fiat CEO Sergio Marchionne stands on the grid before the Formula One Grand Prix of Italy at Autodromo di Monza on September 6, 2015 in Monza, Italy. Dan Istitene/Getty Images

Fiat Chrysler CEO Sergio Marchionne has been trying to merge with another automaker for years — and so far nothing’s worked out.

So now he’s working to spin off FCA’s brands that do well, a playbook he developed with Ferrari back in 2015. Now he’s using that strategy again on Maserati.

On a conference call with analysts and reporters last month, the 65-year-old said “there are no structural, industrial, or engineering restrictions to the separation of Alfa and Maserati.”

Morgan Stanley agrees with him. In a note to clients out Wednesday, the bank says its something investors should pay close attention to.

“We see potential for Maserati to be a stand-alone entity (entwined with Alfa Romeo) by the end of 2018,” write analysts at the bank. “We forecast Maserati sales to double by 2027 and value the business at nearly €7bn or €4.40 per FCA share.”

Morgan Stanley also raised it’s price target on Fiat Chrysler to €15, roughly 18% above where the stock was trading midday Thursday in New York.

The bank also sees the spinoff as a way for FCA to supplement the Alfa Romeo brand. Here’s how its analysts see the component parts individually:

FCA SOTP valuation

A Maserati-Alfa spinoff could be worth 3.1 billion euros, according to the bank’s sum-of-the-parts analysis, and any income from the spinoff could help pay down FCA’s 4.2 billion euros of debt.

“We think it’s reasonable to expect the Alfa Romeo business to be “conjoined” with the Maserati business for a number of reasons,” writes Morgan Stanley. “Primarily because Maserati’s scale and engineering resources can help the struggling Alfa business to either pursue its own volume growth path or to help manage a winding down of the business.”

FCA cut its stake in Ferrari from 90% to 80% in an initial public offering in 2015, and then later distributed its remaining stake in Ferrari to FCA stockholders. Ferrari is currently the best-performing stock in the auto sector, up 93% year to date. That’s better than even Tesla.

A Chinese buyer reportedly made an offer for another FCA subsidiary, Jeep, last week, but FCA rejected the deal.

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