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Investing.com -- Morgan Stanley raised its price target on EssilorLuxottica to €365 from €320, keeping an Overweight rating and naming the stock its top pick, citing accelerating growth driven by its expanding smart-glasses partnership with Meta.
Analysts, led by Grace Smalley, said the company’s double-digit (DD) revenue inflection in the third quarter marks “just the beginning,” with wearables representing a significant long-term opportunity.
The bank’s new proprietary wearables model embeds an 11% compound annual revenue growth rate (CAGR) through 2028 and raises its 2027–28 EBIT forecasts by 3-4%, putting them 6-7% ahead of consensus.
Morgan Stanley expects wearables to contribute seven percentage points to growth in the fourth quarter of 2025 and 10 points in 2026, supported by new product launches and an earlier-than-expected ramp-up in production capacity.
Unit sales are projected to rise from about 5 million in 2025 to 14 million in 2026 and 25 million in 2028, implying smart-glasses revenue could expand from less than €400 million in 2025 to more than €8 billion by 2028.
“Wearables growth has been incremental (and not cannibalistic), with EssilorLuxottica’s underlying growth accelerating alongside wearables,” the analysts wrote, noting a “broader halo impact” from the products on traditional eyewear sales.
They see additional upside from attachment purchases of prescription lenses and from healthcare-related services linked to smart eyewear.
While acknowledging near-term margin dilution from the higher mix of wearables, the team said improved pricing, automation, and scale should offset part of the impact over time.
The analysts see long-term gross margins benefiting from premium models such as Ray-Ban Meta Display and potential future launches under luxury licenses like Prada.
“Prada Group is EssilorLuxottica’s largest license at ~3% of sales, and EssilorLuxottica renewed its license with Prada Group through 2030 last year; importantly, such a move would likely appeal to a different customer group to that of Ray-Ban and Oakley,” the note says.
Morgan Stanley’s base-case model forecasts an EBIT compound growth rate of 15% between 2025 and 2028.
It views EssilorLuxottica’s valuation premium as “more than justified given its ongoing transformation and accelerated growth profile.”