A rare sell call landed on one of Europe's most highly regarded blue chips. Kepler Cheuvreux reversed course, moving EssilorLuxottica to reduce from buy and trimming its price target to €135 ($155) from €244. The French-Italian group, which counts Meta as both a partner and shareholder, has already had a rough run - the stock is off 55% since November and slipped as much as 3% to €140.70 after the report. That price hasn't appeared since 2022, the year Francesco Milleri became CEO following founder Leonardo Del Vecchio's death.
Momentum has also cracked, with the shares tipping into oversold territory on the relative strength index. As of Wednesday, despite the slump, the company still ranked as the third-best rated in analyst recommendations tracked by Bloomberg.
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Kepler's downgrade came alongside a switch in the analyst covering the name and a cooler view on AI-powered eyewear. "Enthusiasm for smart glasses has given way to concerns over slower growth and structural margin dilution," analyst Alessandro Cuglietta wrote, adding, "The absence of a clear killer app, the weak track record of face-worn computing, and privacy concerns, all temper the long-term opportunity." He now projects just 15 million smart-glasses units by fiscal 2030, down from 38 million, and he anticipates the category's gross margin will be a little above half that of the overall company. The products developed with Meta are also under the microscope in Europe: the European Data Protection Board is drafting a report on privacy implications due in October that is likely to influence how enforcement across the bloc treats the tech.
Cuglietta also pointed to opaque governance at Delfin Sarl, the Del Vecchio clan's investment vehicle, which holds just under one-third of EssilorLuxottica's shares, saying it has "raised additional questions related to leadership and strategic direction." Leonardo Maria Del Vecchio, among the eight equal heirs, has criticized Milleri over the share performance and what he claims is insufficient attention to the eyewear group, pushed his relatives to band together to take control at Delfin, and suggested that renewing Milleri's mandate - who chairs both the holding company and EssilorLuxottica - was not guaranteed. Bloomberg data show the company - the world's biggest eyewear player - currently has 23 buy ratings, 3 holds and one sell. Representatives for EssilorLuxottica declined to comment. For everyday investors, the mix of product-cycle doubts, potential regulatory friction and boardroom tension is exactly what can stretch timelines and compress margins - the kind of risk stack worth tracking before growth stories get their groove back.
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