EssilorLuxottica weighed down by Deutsche Bank's cautious stance
EssilorLuxottica shares are among the steepest decliners on the CAC 40 index on Tuesday morning, as the ophthalmic optics specialist suffers from a note by Deutsche Bank, which initiated coverage with a 'hold' rating pending further visibility.
By 9:30 am, the eyewear maker's stock was down 1.9% at 163.9 euros, compared with a 0.6% decline for the CAC 40 at the same time.
Following first-quarter results that fell short of expectations, Deutsche Bank noted in its report that several macroeconomic and competitive uncertainties could limit the stock's short-term recovery potential.
Although the shares have shed more than 40% since the end of last year, the German bank expressed concern that deteriorating consumer sentiment, fueled notably by geopolitical tensions in the Middle East, could continue to pose a risk to demand in the coming quarters.
Competitive landscape remains a major concern
Beyond the macroeconomic backdrop, Deutsche Bank believes that the emergence of new technological competitors could become a central issue for the group's investment thesis. Analysts specifically pointed to projects from Alphabet and Apple, which are reportedly preparing their own launches of AI-integrated eyewear.
These initiatives could challenge the dominant position EssilorLuxottica has gradually built in this segment through its partnership with Meta, according to DB.
'The stock is likely to struggle to outperform until the market gains better visibility on these macroeconomic and competitive risks,' noted the analysts, whose price target of 183 euros nonetheless implies an upside potential of approximately 11.5%.
EssilorLuxottica is a global leader in the design, manufacture and distribution of ophthalmic lenses, frames and sunglasses. Formed in 2018, the company brings together the complementary expertise of two industry pioneers, one in advanced lens technology and the other in the craftsmanship of iconic eyewear, to set new industry standards for vision care and the consumer experience around it. Influential eyewear brands including Ray-Ban and Oakley, lens technology brands including Varilux® and Transitions®, and world-class retail brands including Sunglass Hut and LensCrafters are part of the EssilorLuxottica family.
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