Swatch Group has published its preliminary results for fiscal year 2023. Following this announcement, Stifel confirms its Hold recommendation and leaves its price target unchanged at 225 Swiss francs.
The analyst points out that Swiss watch exports fell by -0.7% year-on-year in the first two months of 2024, compared with +3.6% in the 2nd half of 2023 and +11.8% in the 1st half of 2023.
' This base effect was visible in February, when exports to China fell by 25% year-on-year '.
' Our model currently reflects a significant -6% decline in foreign exchange sales for FY 2024 (-8% in H1 24) '.
Stifel is cautious on Swatch Group shares due to a weaker-than-expected recovery for the Chinese consumer, difficulties on margins due to a stronger Swiss franc.
' A significant improvement in Chinese consumer confidence and the outlook for Chinese consumer spending would probably make us more positive on the stock, which trades at 12.4 times 2024E P/E, according to our estimates' adds Stifel.
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The Swatch Group SA is a Switzerland-based holding company engaged in the apparel and accessories industry. The Companyâs activities are divided into two core business segments: Watches and Jewelry, as well as Electronic Systems. The Watches and Jewelry segment includes the production and sale of branded watches, jewelry and quartz movements, notably the brands Breguet, Harry Winston, Blancpain, Glashuette Original, Jaquet Droz, Leon Hatot, Omega, Longines, Rado, Union Glashuette, Tissot, Balmain, Certina, Hamilton, Calvin Klein watches and jewelry, Swatch and Flik Flak. The Electronic Systems segment includes the production and marketing of electronic components, notably batteries and sports timing equipment. The Company also supplies products from these segments to third-party watchmakers. Swatch Group SA is represented worldwide through its subsidiaries and distributors, notably Tourbillion and Hour Passion, and operates Swiss production plants in Boncourt, Grenchen and Villeret.
SWATCH GROUP 
