Swatch: Credit Suisse downgrades buy rating
(CercleFinance.com) - According to Credit Suisse, the year 2019 will be difficult for "hard luxury," a sub-segment of luxury including watchmaking and jewelry.
Analysts have downgraded their buy rating ("outperform") on the Swiss Swatch stock, slashing their target price by a third, from 510 Swiss francs to 340 Swiss francs.
"We are increasingly cautious on the 2019 prospects for hard luxury," Credit Suisse laments. This luxury segment "is structurally less appealing than soft luxury (clothing and leather goods) because of the length of the product cycle, a weak presence on social networks and the digital world, and the potential "disruption" of watchmaking by connected watches.
Watchmaking's overexposure to Chinese consumers, which would represent between 40% and 45% of sales, is considered a risk, while orders from watch retailers are "cautious", and the Chinese could be exposed to negative wealth effects from the falling stockmarket and real estate prices in the country. This explains significant reductions in Swatch forecasts, and therefore a cut in its target price.
Copyright (c) 2019 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
Analysts have downgraded their buy rating ("outperform") on the Swiss Swatch stock, slashing their target price by a third, from 510 Swiss francs to 340 Swiss francs.
"We are increasingly cautious on the 2019 prospects for hard luxury," Credit Suisse laments. This luxury segment "is structurally less appealing than soft luxury (clothing and leather goods) because of the length of the product cycle, a weak presence on social networks and the digital world, and the potential "disruption" of watchmaking by connected watches.
Watchmaking's overexposure to Chinese consumers, which would represent between 40% and 45% of sales, is considered a risk, while orders from watch retailers are "cautious", and the Chinese could be exposed to negative wealth effects from the falling stockmarket and real estate prices in the country. This explains significant reductions in Swatch forecasts, and therefore a cut in its target price.
Copyright (c) 2019 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.