Watches of Switzerland: Divergent Destinies, Downgrade to Hold

Research evidence excerpt

Watches of Switzerland: Divergent Destinies, Downgrade to Hold

x US growth of PREV 0.42

c.14% in 26/27 and 8.5% in 27/28 (vs JEFe 14.5% and 8%) seems fair rather than too conservative.

Of course swings in equity markets could rapidly influence the demand backdrop. We also note that

we have now started lapping the heightened US price hikes pushed since Liberation Day by major Chart 1 - Our US Watch Price Monitor

Suggests We Are Past Peak Inflation

brands (with cumulative hikes of 12.6% on our monitor across Patek/Rolex/Cartier/Omega), and

that pricing support has started moderating since Sep 2025 (with Patek actually cutting prices by 100 =2025 115

HSD in Feb 2026). April 110

watches,

US 105

…and no silver bullet in the UK. Despite extensive industry lobbying, no evidence has emerged of price 100 Apr-25 Jun-25 Aug-25 Oct-25 Dec-25 Feb-26 Apr-26

Patek Philippe Rolex Omega Cartiera potential reintroduction of duty-free shopping in the UK. Recent political developments suggest .

that such an outcome is a very remote one within this Parliament. This leaves the group largely Source: Jefferies

aligned to a mixed domestic demand outlook, with WOSG’s much more mature presence making

the c.45% of group revenues (by 27/28) vulnerable to a more pressured consumer.

Shifting to a SOTP methodology, but acknowledging fairly valued US attractions. Our prior PT

was predicated on a group cal 2026 PE of 10.3x. Our refreshed target of 740p reflects a roll-over to

2027 earnings and an increased group multiple of 13.1x (rewarding a strong acceleration in demand

in the US in recent months). That overall valuation reflects the split between a much more mature

UK on 10x 2027 PE (aligned with the average for FTSE250 retailers) and 16x for the much more