Swatch Group’s Stock Surge

Investing.com — Swatch Group’s (SIX:UHR) stock surged this week due to speculation about a potential take-private scenario following comments from its CEO, Nick Hayek, as reported by Bernstein analysts.

In a recent interview, Hayek remarked that privatizing Swatch “would be a nice thing to do,” especially given the company’s historically low share prices.

Although he later clarified that no plans were in place, the suggestion sparked significant investor interest. His comments revived discussions about Swatch’s prospects as a private company, primarily due to its underperformance in public markets.

Bernstein analysts had previously discussed the rationale for privatization, suggesting that delisting could provide the Hayek family, long-time controllers of Swatch, the flexibility to implement necessary changes outside public market pressures.

They pointed to Swatch’s stock underperformance in recent years as an incentive for a potential buyout at a takeover premium. Taking Swatch private could unlock value by allowing the company to restructure and refocus without public scrutiny.

Additionally, Bernard maintained an “outperform” rating on the stock with a target price of CHF 222, representing a 42% upside from recent trading levels. This target reflects Swatch’s brand equity and untapped growth potential, possibly realized better in a privatized setting, free from the short-term demands of public shareholders.

The potential for improved operational efficiency, particularly in addressing challenges in the entry-level watch market and overgrown inventory, also supports the possibility of privatization.

Shares of Swatch Group traded 2.2% higher on Friday.