UBS has downgraded shares of Swatch Group AG and Moncler, citing weakening demand in key luxury markets, particularly China, and a challenging outlook for the luxury sector.
- Swatch Group was downgraded to “sell” from “neutral,” with UBS lowering its 12-month price target to CHF127 from CHF178. The company faces declining demand in China, which accounts for 35% of its sales, and UBS expects a sharp drop in Swatch’s EBIT margin to 9.5% by 2028, down from 25% in 2012. UBS also slashed Swatch’s earnings forecasts for FY24 by 24%, and by nearly 50% for FY25 and FY26, projecting a 12.6% revenue decline in FY24.
- Moncler was downgraded to “neutral” from “buy,” with UBS lowering its price target to €53 from €63. The luxury outerwear brand is also facing slowing demand in Europe and China due to macroeconomic pressures, with concerns about a prolonged downturn in luxury spending in these key markets.
UBS highlighted the slow recovery in China and weaker demand from aspirational consumers in Europe and the U.S. as significant challenges for both luxury brands.
