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Investing.com - Barclays has reiterated an Overweight rating on Watches of Switzerland (LON:WOSG) stock with a price target of GBP4.25, citing positive signals from the luxury watch market despite recent U.S. tariff increases.
The research firm notes that early commentary from brands indicates U.S. consumers continue to purchase luxury watches despite higher prices, which it views as "incrementally positive" for the investment case. This consumer behavior suggests affluent U.S. buyers may absorb price increases without significantly reducing demand.
While potential earnings headwinds remain from post-tariff price adjustments, Barclays points to more restrained price changes from some non-supply-constrained brands and robust demand as factors reducing some previously identified downside risks.
The firm highlights that Patek Philippe has implemented approximately 15% price increases in the U.S., which Barclays considers at the high end of the range. Meanwhile, some brands in the Swatch USA portfolio have reportedly made more modest adjustments of 6-10% in response to tariff increases.
Barclays previously indicated that the best-case scenario for Watches of Switzerland would involve low global price increases of approximately 2%, which would spread the higher costs driven by U.S. tariffs across global markets rather than concentrating them in the U.S.
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