Luxury watch shares lose shine on Apple Watch fears

Shares in luxury watchmakers lost their shine on Wednesday after Apple released its hotly-anticipated smartwatch.

Shares in Swatch Group – owner of Omega and Breguet watches –were down 2 percent by mid-morning, while Richemont – known for the top-end Piaget and IWC brands – fell 1.3 percent.

Investors are worried that the Apple Watch could cannibalize the sales of these major players, but most analysts are convinced the share price movement is an overreaction.

Apple CEO Tim Cook speaks about the Apple Watch during an Apple event at the Flint Center in Cupertino, California, Sept. 9, 2014.
Stephen Lam | Reuters
Apple CEO Tim Cook speaks about the Apple Watch during an Apple event at the Flint Center in Cupertino, California, Sept. 9, 2014.

"I don't think it will wipe out Swatch group's business," Jon Cox, head of European consumer equities at Kepler Cheuvreux, told CNBC by phone.

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"There could be potential to eat into sales on the lower end but the share price reaction is overdone."

Apple a boost to watchmakers?

Apple Watch will start at $349, and will go on sale in early 2015. The device tracks users' heart rates and allows them to read and reply to messages, but in a basic form. The smartwatch also has a number of apps but only works with an iPhone.

Richemont generates 46 percent of its revenue through watch sales whereas the figure for Swatch is 90 percent. Swatch Group is more at risk from cannibalization because 23 percent of its revenues are driven by lower-end timepieces, an area that the Apple Watch price targets.

It is the lower price point portfolio that could see a "severe" hit to revenues, according to a note by Sanford Bernstein. But the authors of the note said that this would only be the case if the Apple Watch took off, a development only "time will tell". Swatch will "weather to storm" if Apple's offering turns out to be a fad.

Read MoreiWatch threat to luxury watches 'overdone'

If anything, the Apple Watch could provide a long-term boost for watchmakers, since it could encourage the younger generation to adopt watches from brands such as Swatch, Bernstein's note added.

Geeky?

The design of smartwatches has also been a key issue with analysts suggesting it could be crucial if the devices are to become mainstream and begin to affect traditional watchmakers.

Apple said the watch would be customizable with different faces and straps, including a case that is made of 18-karat gold. But some analysts have accused the technology of looking too "geeky" and not attractive to everyday consumers.

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"I don't think it was an attractive piece and aimed at a very different customer from someone how buys a luxury Swiss watch," Rahul Sharma, managing director at Neev Capital, told CNBC by phone.

"This is squarely aimed at the existing iPhone customers whether you throw in a gold strap or not."

- By CNBC's Arjun Kharpal