Pandora Just Had Its Best Day on the Stock Market in a Year

(Bloomberg) -- Pandora A/S just had its best day on the stock market in a year.

The Danish jewelry maker soared almost 7 percent, beating every other company in Stoxx Europe 600 Index on Wednesday. The move reflects skepticism toward speculation that Pandora might be forced to cut its full-year guidance, according to Per Hansen, an investment economist at Nordnet.

Hansen, who’s based in Copenhagen, says the 35 percent slump in Pandora’s shares this year suggests it’s “oversold,” even after Wednesday’s gains.

“There’s a growing belief that there will be no profit warning after all,” he said in an email.

Investors dumped their Pandora shares in May after Carnegie said it was expecting a profit warning. Carnegie cited the company’s “poor” performance in the first quarter, the risk that Italy -- Pandora’s second-biggest market -- “will get into trouble,” as well as a contraction in store productivity.

After the first quarter, Pandora said it was hit by a slowdown in China. But the company kept its full-year outlook. Hansen at Nordnet says there’s “ample upside” for the share price if there’s no profit warning when Pandora reports second-quarter results on Aug. 14.

In China, “price competition is set to intensify,” said Deborah Aitken, an analyst with Bloomberg Intelligence. But it’s worth noting that Pandora’s sales exposure to Asia is about 21 percent, compared with 48 percent exposure to Europe, Aitken said.

Some hedge funds have started scaling back their bets against the Danish company. WorldQuant now holds less than 0.5 percent, according to a regulatory filing published on Wednesday. The total short interest in Pandora is currently at about 10 percent of the stock, compared with about 13 percent late last year.

©2018 Bloomberg L.P.