Watches of Switzerland Group PLC (LSE:WOSG) stands to benefit from price increases at Rolex, said Shore Capital.
Analysts at the investment bank held their 'buy' rating on the stock and believe Rolex’s third price rise over the last 12 months benefits the jeweller, given most of its revenues are derived from sales of the luxury watch.
Second-hand watches have fallen in value by 27% in the last nine months, according to data from WatchCharts, a research site for pre-owned watches.
However, Shore Capital notes that the brands that experienced “hypergrowth” during the pandemic have seen the most significant reduction in prices.
Included in that list are Patek Phillipe, Rolex and Audemars Piguet, with second-hand prices down 16%, 13% and 14% respectively.
Other brands, like Tag Heuer and Cartier, have seen less than a 5% change in transaction value over the last year.
Breitling and Blancpain are among the brands modestly up, while Bulgari and GP are some brands which saw mid-single-digit growth over the past year.
Ahead of the group's third-quarter trading update in February, US jeweller Signet may have given the markets a hint of what to expect from Watches of Switzerland.
Jewellery often performs better than the rest during tough economic times.
US company Signet echoed this idea, reporting an upbeat third-quarter trading update in December ahead of the holidays.
“Jewellery inherently holds its value, and customers know that,” said Signet chief executive Gina Drosos.
“So they know that if they buy a nice piece of jewellery, it will be worth at least the same, if not have appreciated, a year later. So, we see in tough times, even including recession, jewellery actually does much better than the rest of retail.”