RBC Capital Markets upgraded Swatch Group to Sector Perform from Underperform on Wednesday and increased its price target to 220 Swiss francs from 160. The upgrade followed Swatch's announcement of a collaboration with Audemars Piguet to produce a new pocket watch line called the "Royal Pop," which the companies said will go on sale on Saturday. RBC analysts described the partnership as a "material earnings catalyst not previously in our estimates."
Despite the upbeat view from RBC, investors reacted unfavorably. Swatch shares fell more than 6%, marking their steepest decline in over two months, as traders appeared disappointed by the choice of a pocket watch format and by shareholders' decision on Tuesday to confirm the company's board, according to Bernstein analysts. UBS also expressed skepticism earlier in the week, describing the launch as largely anecdotal and unlikely to offset the group's broader structural challenges.
The stock had experienced a sharp advance of nearly 18% the prior week amid speculation about the partnership. That run-up contrasted with the immediate pullback once the collaboration details were disclosed.
RBC modeling and profit expectations
RBC applied a constructive commercial model to the collaboration. The broker assumed sales of 3.0 million units at an estimated retail price of 350 Swiss francs each, resulting in projected total revenues of 1.05 billion francs. Under a 50/50 profit-sharing agreement with Audemars Piguet, RBC estimated an EBIT contribution to Swatch Group of 390 million francs over fiscal 2026-29.
RBC noted that the partnership is notable within Swiss watchmaking because Audemars Piguet has not previously licensed its Royal Oak silhouette. In a research note, RBC analyst Piral Dadhania wrote that "We may see consensus estimates revise upwards as the product is launched and visibility increases, which in our view had not anticipated a collaboration of this scale and nature."
Comparisons and forecast adjustments
RBC compared the Royal Pop to the 2022 Omega x Swatch Moon Swatch commercial template, which the bank estimates sold around 2 million units at 250 francs apiece and generated roughly 500 million francs of revenue. Given the Royal Pop's mechanical movement and higher suggested retail price, RBC views the new collaboration as a larger opportunity.
Following its modeling, RBC raised its fiscal 2026 revenue estimate by 2% and EBIT by 19%. For fiscal 2027, the bank increased revenue forecasts by 6% and EBIT by 26%. The updated earnings projections now sit materially above pre-collaboration consensus, according to RBC.
Why RBC stopped short of a stronger rating
Although RBC upgraded Swatch to Sector Perform, it did not move the stock to Outperform. The analysts emphasized ongoing structural pressures that constrain a more bullish stance: competition from smartwatches in the entry and mid-price segments, intense rivalry for Omega at higher price points, and rising resale inventory on platforms such as Chrono24. RBC said these structural headwinds remain in place and that it would require evidence of sustained organic volume recovery in Swatch's core portfolio before adopting a more positive rating.
Market participants are now weighing RBC's earnings uplift against the immediate investor reaction and commentary from other brokers, leaving the stock's near-term trajectory uncertain.
Key data points cited in coverage
- RBC price target: 220 Swiss francs (up from 160)
- RBC modeled Royal Pop unit sales: 3.0 million
- Estimated Royal Pop retail price: 350 Swiss francs
- Projected Royal Pop revenues: 1.05 billion francs
- Projected EBIT share to Swatch Group: 390 million francs (across fiscal 2026-29, under 50/50 profit sharing)
- Moon Swatch comparison: ~2 million units at 250 francs, ~500 million francs revenue (estimated by RBC)
- RBC FY26 revenue up 2%, EBIT up 19%; FY27 revenue up 6%, EBIT up 26%
- Share price moves: down more than 6% after announcement; up nearly 18% the prior week on speculation