Lisa Cook sues Trump over firing attempt, emergency hearing set
Investing.com -- Pandora (OTC:PNDRY) A/S and The Watches of Switzerland Group face diverging challenges in the jewelry and luxury watch retail space, according to analysts at UBS Global Research in a note dated Tuesday.
UBS initiates coverage on both stocks with cautious tones, a “sell” rating on Pandora with a DKK 950 price target, and a “neutral” rating on Watches of Switzerland Group with a GBp 400 target.
Despite a strong turnaround under CEO Alexander Lacik, Pandora is expected to face slowing momentum and margin headwinds.
UBS forecasts like-for-like sales growth to decelerate to 4% in 2025 and 2% in 2026 from 6% in 2023 and 7% in 2024 .
The brokerage attributes this to limited future pricing power, after a cumulative 9% price increase from Oct 2024 to Apr 2025, and the brand’s price-sensitive customer base, where internal estimates suggest a 1-point price increase may reduce volumes by 1 point.
The U.S., Pandora’s largest market, is projected to slow, with LFL growth falling to 7% in FY25, down from 11% in Q1 2025.
UBS also notes concerns around rising product complexity from newer lines like ESSENCE and lab-grown diamonds, accounting for 11% of SKUs but only 3% of sales, and the cyclical nature of fashion.
On profitability, UBS expects EBIT margin to contract to 23.5% in 2026, below both company guidance and consensus.
This implies a 170 basis point decline from 2024, with margin flat year-over-year. Key headwinds include rising silver prices, which make up roughly one-third of Pandora’s cost of goods sold, and limited operating leverage due to a retail-heavy business model and ongoing store expansion.
As of July 11, Pandora was trading at DKK 1,054, with UBS cautioning that the market may be overestimating volume resilience and margin upside.
UBS sees limited near-term earnings upside for Watches of Switzerland , citing structural supply constraints from core brands like Rolex and Patek Philippe, which together account for over 50% of sales. These allocations support topline visibility but restrict growth optionality.
UBS forecasts FY26 sales of £1,740 million, up 8% at constant FX, in line with guidance of 6–10%. The U.S. is expected to drive around 70% of growth between FY25 and FY28.
While the long-term outlook includes investments for expansion, EBIT margin (pre-IFRS 16) is expected to decline by 50 bps YoY to 8.6% in FY26, recovering to 9.5% by FY30. Watches of Switzerland’s largely fixed rental model and focus on reinvestment temper margin gains.
Market sentiment remains cautious following Rolex’s acquisition of Bucherer and its direct-to-store launch in China. The stock trades at about 9x forward P/E, down from around 18x pre-deal, reflecting investor uncertainty. As of July 11, 2025, Watches of Switzerland was at GBp 364.
The Roberto Coin acquisition offers long-term jewelry growth optionality, but UBS expects luxury watches to remain over 80% of FY25 sales, limiting near-term impact.