UBS has upgraded Watches of Switzerland Group PLC (LSE:WOSG) to ‘buy’ from ‘neutral’, pointing to strengthening demand for luxury timepieces across the United States.
The bank lifted its price target to 850p from 600p, implying upside of approximately 16% from the 1 July closing price of 730p.
Watches of Switzerland operates as a luxury watch retailer with roughly half its sales generated in the United Kingdom and the other half in the United States.
UBS analyst Zuzanna Pusz, who is taking over coverage of the stock, noted the retailer had repeatedly beaten market expectations in recent months.
That outperformance has been supported by resilient demand for Rolex, which accounts for more than half of total group sales across both markets.
Accelerating trends across other premium brands, including Cartier, have also contributed to the stronger-than-expected trading picture for the group.
UBS now forecasts constant-currency sales growth of 10% for the financial year to April 2027, placing it ahead of both company guidance and broader market consensus.
The United States, which became the group’s largest single market this year, is expected to drive the bulk of that growth going forward.
UBS argued that Watches of Switzerland is relatively insulated from the wider luxury sector slowdown, partly due to its lack of exposure to China.
The group’s high-end positioning, with an average selling price of around £8,000, was also cited as a key buffer against broader consumer spending pressures.
The bank highlighted further acquisition potential, noting that the American luxury watch retail market remains highly fragmented and largely dominated by family-owned independent businesses.
Pusz said the group’s continued growth momentum had eased longstanding investor concerns linked to Rolex’s 2023 purchase of rival retailer Bucherer.
That acquisition had triggered a de-rating of WOSG shares, but UBS now believes the resulting discount to historical valuation is no longer warranted.
The bank’s revised price target restores a price-to-earnings multiple of around 15 times, broadly consistent with the stock’s long-run average.
UBS identified a US luxury market slowdown, a broader stock market correction, and potential Rolex brand fatigue as the primary risks to its newly constructive outlook.
The shares responded positively to the upgrade, rising 7p to 736.5p following the publication of the revised recommendation.
