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On Tuesday, Jefferies analyst Julien Dormois upgraded EssilorLuxottica SA (EL:FP) (OTC: OTC:ESLOY), a $130 billion market cap leader in the optical industry, from Hold to Buy, significantly increasing the price target to EUR310.00 from EUR195.00. According to InvestingPro data, the stock has delivered an impressive 40% return over the past year and is currently trading near its 52-week high. Dormois highlighted the company’s role as a structural share taker and a prime consolidator in the steadily growing optical market, as well as its innovation in various sectors, including MedTech with Stellest, digital with Ray-Ban Meta (NASDAQ:META), and Hearing Care with Nuance.
Dormois pointed out that EssilorLuxottica’s earnings are poised for acceleration, supported by new key offerings and a stronger U.S. market backdrop. With annual revenue of $27.67 billion and a "GREAT" financial health score from InvestingPro, the company maintains a solid market position. The upgrade comes as EssilorLuxottica’s shares have seen a roughly 50% increase over the past year, a rebound after a challenging 2023. The analyst also noted that despite recent gains, the company’s relative valuation remains below historical levels, suggesting potential for further growth. However, with a P/E ratio of 54.57 and current trading levels above InvestingPro’s calculated Fair Value, investors should carefully consider their entry points.
The report mentioned the potential for an expanded partnership or stakeholding with Meta, given the tech giant’s ambitions in the wearable space. This speculation is backed by the company’s innovative strides, such as the Ray-Ban Meta product line.
Dormois believes that the re-rating of luxury and eye care multiples justifies a higher price target, setting it at a street-high of EUR310 per share. This new target reflects confidence in EssilorLuxottica’s market position and its ability to capitalize on growth opportunities in the optical sector.
In other recent news, EssilorLuxottica has witnessed significant attention from analysts. UBS recently increased the company’s price target to EUR266 from EUR248, maintaining a neutral rating. This adjustment comes as smartglasses, a product EssilorLuxottica has already entered into, gain traction and are projected to disrupt the market significantly by 2040, according to UBS.
In addition, RBC Capital Markets has uplifted EssilorLuxottica’s stock rating from ’Sector Perform’ to ’Outperform’, increasing the price target to €290.00 from the previous €220.00. This upgrade is based on the company’s robust fundamentals and potential growth in the mid-term ophthalmology market, with RBC Capital’s analysis suggesting a potential earnings per share increase of 3% for EssilorLuxottica.
On the other hand, UBS has also downgraded EssilorLuxottica’s shares from "Buy" to "Neutral", despite lifting the price target to EUR 248.00 from EUR 232.00. This downgrade is due to potential near-term risks, including potential US tariffs and shifts in broader consumption patterns. Despite these recent developments, EssilorLuxottica remains a key player in the eyewear and eyecare market.
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