Zurich (awp) – Investors were beating up shares of Swatch Group and Richemont listed on the Swiss Stock Exchange on Friday, following uninspiring watch exports in August to China and Hong Kong. The luxury sector had so far benefited from post-Covid catch-up buying in these two markets.
At 11:39, the Swatch share price was down 3.2% at 152.30 Swiss francs and Richemont shares were down 2.6% at 115 Swiss francs. The overall market, measured by the leading SMI index, gained 0.75%. On Thursday, in a euphoric session following the decisions of the American Federal Reserve (Fed), the two shares had mixed fortunes, with Richemont closing at equilibrium and Swatch up 2.5%.
The price drops come after various comments published in recent hours by analysts who revised their assessment downwards for the two watchmaking and luxury goods giants, in the wake of Swiss foreign trade statistics from Thursday.
The American investment bank Jefferies has reduced its recommendation to “underperform” for Swatch Group, while its assessment was previously neutral (“hold”) on the Biel-based group’s bearer shares. This downgrade is explained by the strong exposure of the world’s number one watchmaker to the Chinese market and the mid-price segment. The price target – a 12-month forecast – has been lowered to 120 Swiss francs, compared to 170 Swiss francs previously.
Goldman Sachs analysts also cut Swatch Group’s target price to 175 Swiss francs from 190 Swiss francs. The recommendation is maintained at “neutral”. The group led by Nick Hayek is particularly vulnerable because of its weak margins, they say.
Richemont has to contend with the lowering of three price targets, from Jefferies (to 135 Swiss francs from 165 Swiss francs), Goldman Sachs (to 132 Swiss francs from 150 Swiss francs) and Oddo BHF (to 144 Swiss francs from 161 Swiss francs). However, these three institutions continue to recommend the registered share for purchase.
All analysts agree that the Geneva-based luxury brand manager should fare better than its rival, despite the difficulties. The owner of the Cartier and Van Cleef & Arpels brands has a more balanced portfolio, thanks to a jewelry segment less affected by the current difficulties.
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