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Investing.com - Deutsche Bank upgraded Watches of Switzerland (LON:WOSG) from Hold to Buy with a price target of GBP4.50, citing limited downside risk from U.S. import tariffs.
The bank believes the market has overestimated potential negative impacts on the luxury watch retailer’s earnings from U.S. tariffs, particularly regarding demand for non-supply-constrained brands in the American market.
Deutsche Bank’s analysis indicates these potentially affected brands represent only about 12% of the group’s gross profit pool this year, which significantly limits downside risk to the company’s overall performance.
The bank’s price target of GBP4.50 is based on an 11x price-to-earnings ratio, reflecting confidence in the company’s valuation despite current market concerns.
Even in a more severe downside scenario with 15% pricing increases and 30% volume declines by FY27 for affected brands, Deutsche Bank calculates Watches of Switzerland would still trade at approximately 9x earnings.
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