EssilorLuxottica shares are posting the steepest decline on the CAC 40 index in Paris this Monday, as Bernstein lowered its price target on the stock, citing structural risks stemming from the sector's transformation. At 3:35 PM, the stock was down 3.29% at 208.60 euros, trading near its intraday lows. At the same time, the CAC 40 was retreating by less than 1%.

While maintaining its "Market Perform" rating, the research firm indicated it has slashed its target price on the stock from 250 to 185 euros.

In its note, Bernstein highlights that the Franco-Italian eyewear giant, which for some time enjoyed a tech-stock status with a P/E ratio exceeding 30x, is now seeing its valuation multiples contract. According to Bernstein, this correction reflects a paradigm shift: connected AI no longer represents just a growth opportunity, but also a competitive risk.

"We do not subscribe to the idea that smart glasses represent a purely incremental market," its analysts argue.

From their perspective, the group will now face a "head-on war" from tech giants such as Apple, Google, or Alibaba, making long-term value capture more uncertain.

Three major risks

Bernstein centers its concerns around three main pillars: (1) potential cannibalization, where tech products could erode market share in its core business; (2) operating margins under pressure due to the vertical integration strategy; and (3) competitive advantages in physical distribution that are perfectly "replicable" by tech giants.

P/E multiple revised to 21x

In this transformative context, the research firm favors a cautious approach, adopting a multiple of 21x earnings as a "realistic valuation floor." This scenario suggests the group's priority will first be to defend its legacy franchise rather than relying on speculative tech growth.

Investors are now awaiting the next financial update, with first-quarter revenue figures scheduled for release this Wednesday.