Barclays Capital has repeated its 'overweight' recommendation on Watches of Switzerland Group PLC (LSE:WOSG) stock following the company's first half (H1) results.
The bank's share price target for Watches of Switzerland is £12.25, while currently the shares are valued at £8.98, down 1.1% on the day.
According to the research note, H1 earnings before interest and tax (EBIT) came in at £87m, up 29% and at the middle of the guided range given in the Q2 update (£86-88m). Excluding a £5m business rates relief in H1 22, EBIT margins would be +70 basis points (bps).
The company also revealed that holiday trading has been "in line" with expectations and that guidance for FY23 remains unchanged. Watches of Switzerland also announced a new store in Manhattan, set to open in 2023 and anchored by Omega and Cartier.
Inventories increased by £143m to £384m in H1, but the company noted that the increase allows it to "represent its partner brands more favourably and increase ranging ahead of the key holiday season".
The increase also reflects £26m from acquisitions, £18m from new showrooms, and £25m from foreign exchange, resulting in a like-for-like increase of c£75m, or +31%, compared to the actual increase of +59%.
Overall, the research note considered the results as "encouraging, given current trading is holding up, but acknowledge the recent re-rating has driven the shares well off their late Sept low".
Of the ten analysts following Watches of Switzerland, eight are positive on the stock. The consensus share price target is £12.27.