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Investing.com -- Redburn has upgraded EssilorLuxottica to Buy, setting a price target of €320, which implies 21% upside from its current share price as of Tuesday’s close.
The analysts cited the company’s dominant position in vision care and expansion into new categories as key reasons for the move.
“EssilorLuxottica holds an unrivalled position in the vision care market, supported by best-in-class manufacturing and retail operations,” Redburn said.
The brokerage added that the group is broadening its horizons, investing in myopia management (Stellest), audiology (Nuance), and smart glasses (Meta), which it sees as “sustainably higher growth” opportunities.
Redburn acknowledged that these ventures may weigh on profitability in the short term, but expects the impact to be temporary.
“While unlocking new verticals comes at the expense of near-term margin expansion, the rapid scaling of wearables and lens pull-through means dilution is short-lived,” the note stated.
The analysts raised their forecasts for the company, writing: “Our work on EssilorLuxottica’s new growth drivers prompts us to upgrade our mid-term revenue and organic growth forecasts meaningfully.”
They project that operating margins could expand to 20% by fiscal 2030, underpinned by “enhanced scale and improving price/mix.”
In earnings, Redburn expects the company to deliver a 14.8% compound annual growth rate for EPS between fiscal years 2025 and 2028.
“We believe a premium valuation is justified,” the analysts concluded, calling EssilorLuxottica’s position in optical markets structurally attractive and enhanced by entry into new verticals.