UBS raises EssilorLuxottica price target to EUR266 from EUR248

On Thursday, UBS analyst Susy Tibaldi updated the financial outlook for EssilorLuxottica SA (EL:FP) (OTC: OTC:ESLOY), increasing the price target to EUR266.00 from the previous EUR248.00. The stock, currently trading near its 52-week high with a market capitalization of $125 billion, has shown strong momentum with a 40% return over the past year. Despite the change, the firm maintained a Neutral rating on the stock.

The adjustment comes amid growing interest in smartglasses, a product that is on the verge of transitioning from a futuristic concept to a practical tool for daily life. Smartglasses have the potential to revolutionize the way individuals interact with their environment, and investors are keenly interested in EssilorLuxottica’s role in this emerging market. According to InvestingPro data, the company maintains a strong financial health score of 3.28, labeled as "GREAT," with robust profit margins of 62.5%.

UBS’s analysis suggests that smartglasses could significantly disrupt the market, with projections indicating the possibility of an €80 billion market size by 2040. However, the firm also notes that the actual impact of smartglasses will greatly depend on consumer behavior and the rate at which they are adopted.

EssilorLuxottica is currently in a favorable position due to its early entry into the smartglasses market. Nonetheless, UBS believes that the presence of another major competitor is crucial for fostering consumer acceptance and ensuring that smartglasses become more than just a novelty item. The competition is expected to drive the adoption of smartglasses beyond a limited audience.

Tibaldi’s commentary highlights the dual nature of the market’s potential, acknowledging both the promising prospects of smartglasses and the uncertainties surrounding their future. As of now, EssilorLuxottica remains a key player to watch as the technology develops and starts to penetrate the consumer market. InvestingPro analysis suggests the stock is currently trading above its Fair Value, with 16 additional ProTips available to subscribers covering everything from dividend history to market positioning.

In other recent news, RBC Capital Markets upgraded EssilorLuxottica’s stock rating from ’Sector Perform’ to ’Outperform,’ raising the price target to €290.00, up from the previous €220.00. This decision was influenced by the company’s robust fundamentals and the potential for growth in the mid-term ophthalmology market. RBC Capital’s analysis suggests a possible earnings per share (EPS) increase of 3% for EssilorLuxottica, or 2% excluding the Pharma division, with the deal size being manageable at an enterprise value of €12 billion.

In contrast, UBS downgraded EssilorLuxottica’s stock from "Buy" to "Neutral," despite increasing the price target to EUR 248.00 from EUR 232.00. UBS’s decision was influenced by potential near-term risks, including potential US tariffs and shifts in broader consumption patterns. However, they also acknowledged the company’s strong growth prospects and market position.

These are recent developments that reflect differing perspectives from two prominent financial firms on EssilorLuxottica’s future performance. Both RBC Capital and UBS have adjusted their ratings and price targets based on their analysis of the company’s market opportunities, financial performance, and potential risks.

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