Shares of EssilorLuxottica SA (EPA:ESLX) declined by more than 3% on Tuesday, underperforming a generally firmer European market following a change in analyst stance from Goldman Sachs. The firm downgraded the maker of Ray-Ban frames to Neutral from Buy, signalling a reassessment of near-term growth potential tied to its AI-enabled eyewear business.
EssilorLuxottica stock slid 3.3% to close at €163.75, while the STOXX 600 fell about 0.7% over the same trading period. Goldman also reduced its 12-month price target to €200 from €230.
In its note, the broker said investor expectations had become overly optimistic as easier comparisons begin to fade and industry competition heats up. Goldman lowered its long-term constant-currency revenue growth forecast for 2026-2028 to an average of 7.9%, down from 8.9% previously. That revised forecast sits below the market consensus of 9.5% cited by the broker.
Goldman identified AI glasses as the largest contributor to EssilorLuxottica's recent growth surge, but warned that sustaining blockbuster-level launches will be increasingly difficult. The firm highlighted a pipeline of smart-glasses introductions from major technology players - including Google, Samsung and Apple - that it expects could intensify competitive pressures over the next 18 months.
The note also pointed to the recent introduction of lower-priced smart glasses from Meta, suggesting that this could alter EssilorLuxottica's role within the AI-glasses value chain. Goldman said the company might shift toward supplying lenses and distributing products rather than remaining the primary frame manufacturer. While such a transition could ultimately support margins, it may weigh on headline revenue growth in the near term.
Despite the downgrade, Goldman maintains that demand for AI eyewear remains healthy and that the category is likely to keep expanding. The broker framed its move as a recalibration of growth expectations rather than an indication of a loss of the company's longer-term competitive position, noting investors should temper the optimism that followed rapid acceleration during the prior year.
Summary
Goldman Sachs downgraded EssilorLuxottica to Neutral and cut its price target to €200, citing expectations of slower growth for the company’s AI glasses business amid tougher comparisons and rising competition. Shares fell about 3.3% to €163.75, underperforming the STOXX 600.
Key points
- Goldman lowered its 12-month price target from €230 to €200 and shifted its rating to Neutral from Buy.
- The broker trimmed its long-term revenue growth forecast for 2026-2028 to 7.9% from 8.9%, below a cited market consensus of 9.5%.
- Competition from Google, Samsung, Apple and lower-priced Meta smart glasses could reshape market dynamics for AI-enabled eyewear, affecting manufacturing and distribution roles.
Risks and uncertainties
- Slower-than-expected momentum in AI glasses growth could pressure revenue expansion for EssilorLuxottica - impacting the consumer eyewear and tech-enabled wearables sectors.
- Intensifying competition from major tech entrants and lower-priced products may compress market share and lead to changes in the company’s role in the value chain - affecting manufacturing and distribution economics.
- A shift toward supplying lenses and distribution rather than frame manufacturing may support margins over time but could reduce headline reported revenue growth during the transition period.