Watches of Switzerland (LON: WOSG) shares plunged Friday, closing down more than 20% at 548.5p after news broke at the start of the session that Rolex would buy luxury watch retailer Bucherer for an undisclosed amount.

Rolex said Bucherer will operate independently, but the acquisition raised questions regarding WOSG’s prospects.

Despite WOSG claiming it is “not a strategic move into retail by Rolex,” others are skeptical. Proactive Investors reported that Shore Capital analysts stated the “acquisition is seen as a strategic move by Rolex to secure its position and strengthen its presence in the luxury watch market.”

Other analysts were also quick to react, with Peel Hunt downgrading the stock to Hold from Buy, with a price target of 600p, down from 900p per share.

The firm stated that the uncertainty stemming from Rolex’s plans to purchase Bucherer will weigh on Watches of Switzerland shares for some time.

Meanwhile, HSBC also cut the stock to Hold from Buy, with a 770p per share price target. Analyst Akshay Gupta also explained that the rating change was due to Rolex’s plans to acquire Bucherer.

By Sam Boughedda