Company Reports

Essilorluxottica delivered 8.7% growth in the second quarter, which was a deceleration from 10.8% registered in the first quarter. Adjusted operating margin improved by 80 basis points at constant exchange rates.

EssilorLuxottica saw a strong first quarter with revenue growth of 10.8% at the constant exchange rate. Wearables accounted for half of the growth, while the traditional business grew at a solid midsingle digit.

We think EssilorLuxottica will benefit from intangible assets (strong brands, distribution channel access, and research and development platforms) and cost advantage, enabling it to generate economic profits well into the future.

EssilorLuxottica reported sales growth acceleration to 11.2% in 2025 (from a mid-single-digit rate historically), helped to a large degree by the popularity of artificial intelligence glasses, of which more than 7 million were sold. Margin came in at 16% on an adjusted basis versus 16.7% in 2024.

We think EssilorLuxottica will benefit from intangible assets (strong brands, distribution channel access, and research and development platforms) and cost advantage, enabling it to generate economic profits well into the future.

EssilorLuxottica reported strong acceleration in third-quarter revenue to 11.7% on the back of accelerated adoption of wearables (Ray-Ban Meta and Oakley Meta glasses). Shares were up almost 12%.

EssilorLuxottica reported 7% sales growth at constant exchange rates in the first half, driven by strong performance in Europe, Middle East, and Africa, and growing traction of its AI glasses developed with Meta. Operating margin remained at 18.3%. Shares rose 5% at the market open on July 29.

We think EssilorLuxottica will benefit from intangible assets (strong brands, distribution channel access, and research and development platforms) and cost advantage, enabling it to generate economic profits well into the future.

We are maintaining our fair value estimates for stocks in our luxury coverage following the announcement of reciprocal tariffs by US President Donald Trump. Tariffs of 20% on the European Union, 10% on the UK, and 31% on imports from Switzerland are having the most impact on our coverage (as well as 36% tariffs on Thailand for Pandora, where most of its manufacturing takes place). Americans account for around 30% of global luxury consumption and sales exposures in the Americas for companies under our coverage range from the midteens to high 30s. Moncler, Prada, and Swatch are least exposed; EssilorLuxottica, Brunello Cucinelli, and Pandora are most exposed.

We are maintaining our fair value estimate for wide-moat EssilorLuxottica as it reported solid 2024 results, which were still somewhat short of our expectations. At current levels, shares are trading at 35 times earnings and look overvalued.

We are increasing our fair value estimate for wide-moat Essilorluxottica to EUR 173 on back of solid first-half results. Markets are reacting strongly to the results and to speculation of Meta being interested in buying a stake in Essilorluxottica, its partner in smart eyewear technology.

We think EssilorLuxottica will benefit from intangible assets (strong brands, distribution channel access, and research and development platforms) and cost advantage, enabling it to generate economic profits well into the future.

We are maintaining our fair value estimate of EUR 162 for wide-moat EssilorLuxottica as the company reported solid sales in first-quarter 2024. We believe high exposure to optical products reduces the cyclicality of EssilorLuxottica, but that is well reflected in the share price, which we view as expensive at 28 times forward FactSet consensus earnings.

We are maintaining our fair value estimate for wide-moat EssilorLuxottica as the company reported full-year 2023 revenue largely in line, but operating profit was somewhat below our estimates. We view shares as expensive at current levels.

We think EssilorLuxottica will benefit from intangible assets (strong brands, distribution channel access, and research and development platforms) and cost advantage, enabling it to generate economic profits well into the future.

We are increasing our fair value estimate for wide-moat EssilorLuxottica from EUR 155 per share to EUR 162 per share, largely as a result of time value of money after the company reported some deceleration in sales growth in the third quarter. Sales growth was 5.2% in the quarter at constant exchange rate, and currencies were a meaningful headwind (revenue at actual exchange rates down by 1.6%). This was a deceleration from 8.2% in the first half. Deceleration was quite broad-based across the regions. We see shares as fairly valued at current levels.

We think EssilorLuxottica will benefit from intangible assets (strong brands, distribution channel access, and research and development platforms) and cost advantage, enabling it to generate economic profits well into the future.

We maintain our EUR 155 fair value estimate for wide-moat EssilorLuxottica as the company reported solid first-half results. Its revenue growth rate at constant exchange rates continued at a high-single-digit pace with 8% in the second quarter and 8.2% in the first half. Growth was led by the Asia-Pacific region with a 23.9% increase in the second quarter, boosted by greater China where growth was over 50%, was also boosted by Stellest (preventive care-lens products targeting children). Growth in Europe, Middle East, and Africa was also strong at 10.6%. Both regions accelerated sequentially in the second quarter. Growth in Latin America was also at a high single digit for the quarter and the quarter. Sales in North America, a problematic region for many luxury names in our coverage due to a very high comparison base, were helped by nonrecurring drivers (COVID-19 time-savings and payment checks) that decelerated, but remained in positive territory in the second quarter, with 2.3% growth at constant exchange rates. Sunglasses retail in the region, which tends to be more discretionary, turned negative in the quarter. We believe high exposure to less cyclical optical prescription product categories, at over 70% of revenue, should protect EssilorLuxottica from economic headwinds to an extent. The adjusted operating margin expanded by 10 basis points despite inflationary headwinds due to good cost controls.

We are maintaining our fair value estimate of EUR 155 for wide-moat EssilorLuxottica following a strong first quarter with total revenue up 8.6% over the first quarter of 2022 at constant exchange rates. Both professional solutions and direct to consumer had strong year-over-year growth, with 7.7% and 9.4% at constant exchange rates, respectively. We currently view shares as overvalued.

We are maintaining our fair value estimate for wide-moat Essilorluxottica as the company reported full-year results largely in line with our estimates. Revenue came in 2% higher than our estimates, but operating profit was bang in line as adjusted profitability progression was a bit slower than expected (16.8%, up 70 basis points from 2021 and lower than our 17.2% estimate). Shares look slightly overvalued at current levels.