Rogerio Fujimori, an analyst from Stifel Nicolaus, maintained the Hold rating on The Swatch Group (SWGAF – Research Report). The associated price target is CHF230.00.
Geoff Meacham has given his Hold rating due to a combination of factors surrounding The Swatch Group’s performance and outlook. The group’s recent fiscal year results revealed a margin squeeze that was more severe than anticipated, falling short of profit expectations by 11%. Although sales grew by 12.6% on a constant currency basis in FY23, this growth revealed a deceleration in the second half of the year, which underperformed against forecasts. Additionally, the strength of the Swiss franc posed significant challenges to profit margins, a headwind that is expected to persist into the next fiscal year.
Despite these headwinds, The Swatch Group’s management remains optimistic about the future, particularly for its lower and medium-priced brands, as well as a strong performance expected from Harry Winston. The appetite for the MoonSwatch remained robust throughout the year, and the Swiss market saw substantial growth. Moreover, the company’s retail channel mix strengthened further, which could be a positive indicator for direct consumer engagement. Nevertheless, the combination of margin pressures and currency challenges has led to a cautious stance, hence the Hold rating by Rogerio Fujimori.
In another report released on January 15, Jefferies also maintained a Hold rating on the stock with a CHF210.00 price target.
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The Swatch Group (SWGAF) Company Description:
The Swatch Group AG engages in the design, manufacture, and sale of finished watches, jewelry, watch movements, and components. It operates through the Watches & Jewelry, and Electronic Systems segments. The Watches & Jewelry segment is involved in the designs, production, and marketing of watches and jewelry. The Electronic Systems segment develops, manufactures, and sells electronic components; and sports timing activities. The company was founded by Nicolas Georges Hayek in 1983 and is headquartered in Biel, Switzerland.
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