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Investing.com -- JPMorgan has placed Swatch Group (SIX:UHR) on its Negative Catalyst Watch list ahead of the company’s first-half (H1) results, flagging concerns over near-term earnings momentum and cutting estimates across the board.
The bank expects a weak set of H1 results, citing softer industry data and adverse forex (FX) effects.
The company’s shares fell more than 1% in Switzerland as of 09:43 GMT.
Swatch’s net sales are projected to decline 5% year-on-year to CHF 3.27 billion in H1, with EBIT seen falling 36% to CHF 131 million—roughly 30% below consensus.
“Overall, we expect soft H1 results,” said analysts led by Chiara Battistini, adding that group margins could drop by 190 basis points year-on-year to 4%, with Watches & Jewellery margins falling to 5.8%.
The earnings downgrade comes with a sharp revision to the full-year outlook. JPMorgan slashed its full-year 2025 (FY25) EBIT forecast by 36%, with cuts of 12% for FY26 and 6-7% for the following years.
The bank’s FY25 adjusted EPS forecast drops from CHF 5.22 to CHF 3.15, leaving it 37% below Bloomberg consensus.
As a result, JPMorgan lowered its December 2026 price target to CHF 118 from CHF 125 and reiterated its Underweight rating.
“Still, with likely a soft reporting in July, and expecting very large negative earnings revisions around it, we place Swatch on Negative Catalyst Watch into the H1 update,” the analysts said.
Swatch shares have declined 20% year-to-date and over 31% in the past 12 months. JPMorgan continues to see structural challenges in Swatch’s exposure to the mid-range segment and its high reliance on the Chinese market and wholesale channels.
The bank views Swatch’s geographic mix as “the most unfavourable” in its coverage and said the group faces ongoing top-line and margin pressure.
JPMorgan’s revised estimates now imply an FY25 EBIT margin of 3.9% and adjusted EPS growth of -15.9%.