iWatch threat to luxury watches ‘overdone’

Luxury watchmaker Swatch Group has seen shares hammered on concerns that profits could be dented by competition from smartwatches such as Apple's hotly-anticipated iWatch.

Swatch – which makes Omega and Breguet timepieces, among others – has seen its stock fall nearly 14 percent this year, but one analyst said the smartwatch fears are "overdone" and the slump in share price is a buying opportunity.

Read MoreApple's iWatch could hit this Swiss watchmaker

"I think there's been a lot of focus on the whole threat of smartwatches, I think it's overdone. Owning a Swiss watch has always been much more than telling the time… I don't think this is (the) existential threat some people assume it is for the Swiss watch industry," Jon Cox, head of European consumer equities at Kepler Cheuvreux, told CNBC on Monday.

Luxury watches Swiss watches
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The pan-European Stoxx Europe 600 personal and household goods sector index, which includes several luxury companies including Swatch, has risen 2.34 percent this year, while shares of Swatch's closest rival, Richemont, are flat.

Swatch-Apple tie up?

The comments come amid speculation that Apple will launch its iWatch later this year, with Swatch thought to be the Swiss brand most exposed to the release.

Swatch's lower-end brand portfolio generates 23 percent of watch revenue for the group, and analysts at Bernstein Research warned last month that an Apple smartwatch launch would likely hit this revenue.

Read MoreLuxury Swiss watch exports to China shoot up

But Kepler Cheuvreux's Cox remained bullish, predicting that Swatch would also enter the smartwatch space, given the company's expertise in Bluetooth and chips. The company could also benefit from a tie-up with Apple if the technology giant wanted to have some of the iWatches made in Switzerland, he said.

"To be honest, the only place Apple could go to get those made in Switzerland is probably Swatch Group itself. So in some ways it could be more of an opportunity than a threat for Swatch Group," Cox said.

Luxury stock rally

Another concern for luxury watchmakers has been the Chinese market, amid an anti-corruption probe last year aimed at stamping out bribery and gift-giving amongst officials. This has had a negative impact on high-end brands such as cognac producers and watchmakers, but there are signs that the tide is turning.

Swiss watch exports to China jumped 49 percent in July from the same time last year, according to the Federation of the Swiss Watch Industry. Swatch also reported growth in the China market in the first half of the year.

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Continued positive momentum in the world's second-largest economy could see a luxury stock rally in the second half of the year, Cox said.

"There are signs of stabilization in that greater China region… we may see some improvement and that could get some of these stocks going. They obviously haven't had a very good year so far but you may find there's a bit of a rally towards the tail end of the year," he added.

- By CNBC's Arjun Kharpal