Deutsche Bank downgrades Watches of Switzerland to 'hold'
By Michele Maatouk
Date: Wednesday 15 Jan 2025
(Sharecast News) - Deutsche Bank downgraded its stance on Watches of Switzerland to 'hold' from 'buy' on Wednesday as it said it was "time to pause".
The bank, which lifted its price target on the stock to 510p from 490p, said that in the mid term, WOSG remains one of its most preferred growth stories.
"Whilst we won't argue for a return to Covid high multiples that saw WOSG trade above luxury brands themselves, we do believe this is best in class retail, acting as a strategic partner in a resilient luxury category," it said.
"We see compelling mid-term opportunities for growth, most notably in the US, and we don't believe there is a meaningful risk to WOSG model from Rolex's acquisition of Bucherer."
DB noted that the stock is up 15% since its upgrade to 'buy' in September, largely driven by PE multiple expansion, now trading largely in-line with its 12x Cal-25 PE target.
"However, first-half results raised some questions for us on underlying profitability and the shape of growth, which together with our FY26e EPS estimates sitting circa 5% below consensus means we hold back on arguing for a further re-rating until visibility into the year ahead improves," it said.
At 1300 GMT, the shares were down 2.3% at 460p.
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