UBS Global Research has moved Pandora A/S to a neutral recommendation from a previously more cautious posture, and lifted its price target to 757 Danish krone - an increase of 49% - saying the jewelry maker's operational execution is "moving in the right direction" under its new chief executive.
The investment house said its prior caution reflected concerns about slowing earnings momentum and the risk of a valuation re-rating. Those concerns have been borne out: earnings per share are down 55% and the valuation multiple has fallen from 16 times over the past year.
UBS warned that macroeconomic uncertainty persists and that lower-income consumers remain under pressure. Even so, the broker highlighted signs of improvement in the brand's positioning, pointing to a renewed focus on local relevance, emotional storytelling and product innovation as positive developments for Pandora's retail proposition.
Analysts at UBS also noted that a reset in market expectations, combined with the rollout of platinum-plated products, should help mitigate commodity and foreign-exchange headwinds and support a gradual recovery in margins.
Guidance, forecasts and the path to recovery
Company guidance for fiscal 2026 remains cautious, with like-for-like sales expected in a range from down 3% to flat. UBS, however, judges there is limited downside risk to its own estimates. The broker raised its fiscal 2026-28 earnings-per-share forecasts by 6%, 14% and 9%, respectively.
UBS sees the combination of stabilizing underlying trends and conservative company guidance - set against easing year-over-year comparatives - as increasing the chance of positive topline surprises. After flat like-for-like sales in the first quarter, the broker models a gradual improvement: approximately 1% like-for-like growth in the second quarter and around 2% in the second half of the fiscal year.
On assumptions, UBS raised its fiscal 2026 like-for-like sales forecast to plus 1% from a prior minus 1%, ahead of company guidance. From fiscal 2027 onward, UBS models 2% like-for-like growth. The firm said these assumptions reflect easier comparatives and an expected acceleration in product innovation supported by what it calls a "re-engineered product pipeline," which underpins a 4% sales compound annual growth rate for fiscal 2027-30.
Margins, risks and upside catalysts
UBS had previously expressed caution about Pandora's strategy to introduce platinum-plated jewelry because of execution risk in what it described as a fragile consumer environment. The broker now views a reset in margin expectations - specifically an expected EBIT margin of 21% to 22% in fiscal 2026 and at least 12% from fiscal 2027 - as providing a support level for estimates for a momentum-driven stock such as PNDORA.
The broker identified several potential sources of upside: additional cost-of-goods-sold efficiencies, a smoother-than-expected metal transition and easing silver price headwinds. UBS raised its EBIT margin forecasts by 40 basis points, 80 basis points and 30 basis points for fiscal 2026, 2027 and 2028, respectively, driven mainly by higher gross margin assumptions.
Implications for investors
UBS's actions reflect a view that Pandora's near-term operational trajectory is improving, while also positioning estimates conservatively against visible risks. The upgrade and higher price target signal that the broker now believes the company's execution and product initiatives can begin to translate into measurable sales and margin recovery, even as broader consumer pressures and commodity and currency headwinds continue to pose risks.
The company remains sensitive to trends in consumer discretionary spending and to movements in precious metals costs and foreign exchange rates; these factors will be closely watched as catalysts for further revision in consensus expectations.