July 24 (Bloomberg) -- Pandora A/S gained in Copenhagen trading as investors bet the Danish jewelry maker may benefit from a return in demand after Swiss watch maker Swatch Group AG beat estimates.
Pandora rose as much as 4.1 percent, and was trading 1.6 percent higher at 57.35 kroner as of 1:03 p.m. in Copenhagen. The move left the stock the third-biggest gainer in the 20-member index of Denmark’s benchmark stocks
“Swatch has reported some pretty strong numbers this morning, and you could argue that Swatch to some extent targets the lower end of the watch market, just as Pandora targets the lower end of jewelry market,” Niels Granholm-Leth, an analyst at SEB Enskilda, said by phone. “Pandora is in a special situation; they’re in the middle of a turn-around.”
Swatch rose the most in more than a month in Zurich trading after the biggest maker of Swiss watches reported first-half profit that beat analysts’ estimates, boosted by growth at its component business. Net income gained 25 percent to 720 million Swiss francs ($727 million) from 575 million francs a year earlier, the Biel, Switzerland-based company said today.
Pandora, which lost 84 percent of its market value last year, has been targeting growth markets in an effort to underpin a rebound in sales. The company said in May it opened five new stores in Russia in the first quarter, bringing its total there to 46. It also opened seven stores in Asia, for a total of 109 for the continent. The company on Aug. 2 last year announced Chief Executive Officer Mikkel Vendelin Olesen’s resignation as it abandoned a plan to raise prices.
“Pandora has been very weak recently, trading as low as 50, and in the past three or four sessions, it has come back to around 60,” Granholm-Leth said. “Traders are moving around their positions.”
Shares in Pandora have recovered 6.7 percent this year, lagging behind a 19.4 percent surge in the benchmark OMXC20 Index in the period.
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