Swatch: Credit Suisse upgrades stock, raises target price

(CercleFinance.com) - Credit Suisse has upgraded its rating on the Swatch share neutral to buy and Outperform, raising its corresponding target price from 190 Swiss francs to 260 Swiss francs.


"We see more limited risk to consensus earnings and some rerating potential on P/E and P/B multiples as cyclical indicators in the watch industry are turning positive, cost restructuring is underway, and the balance sheet remains strong," Crédit Suisse said.

"We adjust our 2H organic sales forecasts to -15% and FY20e operating profit to SFr34m. We raise our FY21e operating profit estimate by 58% to SFr621m. This puts us 10% above consensus. Finally, our FY22e organic sales and profit estimates remain 3% and 17% below FY19 levels," it added.

"We estimate 25% and 45% of FY19 group sales came from China and Chinese consumers. The rebound in Chinese demand for watches came stronger than most categories in 2Q driven by brand strength".


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