Source: Sharecast
WOSG is a leading retailer with long-standing partnerships with all the major Swiss luxury watch brands in the UK and US. It has "untapped penetration potential" in the US and Continental Europe via M&A and selective boutique openings, Stifel said.
Currently, Rolex accounts for around half of WOSG's group revenues, and the recent acquisition of Bucherer by Rolex "creates some clouds over the long-term horizon and somewhat changed the equity story", the broker said.
"Bucherer under Rolex ownership may increase competition for M&A in the US and make it harder for WOSG to penetrate new markets in Continental Europe with Rolex potentially embracing DTC (direct to consumer) in the future, following the steps of all other leading Swiss luxury watch brands," Stifel said.
The stock trades at just 11 times forward earnings, which looks "cheap" considering its revenue and profit growth potential.
"However, a challenging US/UK macro backdrop and the emergence of long-term clouds post the Rolex-Bucherer deal may keep a lid on multiples," the broker said.
Stifel gave a 680p target price for the stock, which was up 0.6% at 590.50p on Friday morning.