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Investing.com -- Shares of Watches of Switzerland Group PLC (LSE:WOSG) climbed 4% today after the company announced a share buyback program, signaling a potential end to its near-term capital expenditure cycle.
The luxury watch retailer has recently completed several large projects, including new Rolex boutiques in Old Bond Street, Plano Texas, Jacksonville, and Mayors locations in Florida and Atlanta.
The move is seen as a small positive by RBC analysts, considering WOSG’s strong balance sheet and cash generation capabilities, alongside its currently low share price.
The buyback announcement comes at a time when WOSG’s stock had seen a decline of 21% over the last three months. The company’s management appears to be taking steps to convey confidence to investors amidst this recent weakness.
However, some bearish investors are concerned that this buyback could signal a reduced likelihood of large-scale mergers and acquisitions, which may be necessary for WOSG to achieve its ambitious revenue target of £3 billion by the fiscal year 2028.
RBC’s estimates fall short of this goal, projecting revenue of £2.08 billion, which is in line with the consensus estimate of £2.1 billion.
RBC analysts commented on the financial impact of the buyback, stating, "We estimate ~3% EPS accretion to FY25E and FY26E consensus estimates."
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