EU and US could reach trade deal this weekend - Reuters
On Tuesday, JPMorgan analysts downgraded Pandora (OTC:PNDRY) A/S stock from Overweight to Neutral and reduced the price target to DKK1,100 from DKK1,400. The downgrade reflects concerns over the jewelry company's significant exposure to the US market and the impact of newly imposed tariffs.
Pandora, with over 30% of its group sales coming from the US, is now facing a 36% tariff on imports from Thailand, its sole production source. This tariff is expected to have a substantial financial impact, with an unmitigated effect of approximately DKK700 million in 2025 and DKK1.2 billion annually thereafter, which is around 14% of current EBIT estimates.
The analysts expressed worries about Pandora's ability to offset these additional costs through price increases or supply chain adjustments. Despite the Thai government's engagement with the US administration to facilitate trade, JPMorgan suggests that Pandora might struggle due to its limited pricing power, especially as it seeks to mitigate the effects of recent silver price inflation.
The downgrade also takes into account the mixed performance across Pandora's markets. While the US demand continues to outperform, other regions like Italy and France are experiencing negative growth, with Germany showing signs of slowing down. This uneven performance adds to the uncertainty surrounding the company's revenue projections and potential risks to both margins and top-line growth.
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