EssilorLuxottica, a company once widely favored by analysts, has seen its stock plummet, culminating in a rare 'Sell' rating from Goldman Sachs. The shares have fallen to €140.70, marking their lowest level since 2022. This decline represents a 47.54% drop over the past year, with a 12.6% reduction in value over the last month alone. The stock is currently trading significantly below its moving averages, with a gap exceeding 30% from its 200-day moving average, signaling persistent bearish momentum. Despite solid first-half 2026 results showing a 15% increase in adjusted operating income and €1.07 billion in free cash flow, these positive fundamentals were insufficient to halt the 22.66% decline over the last three months.
Goldman Sachs downgraded EssilorLuxottica from 'Buy' to 'Neutral' and lowered its 12-month price target to €200 from €230. The firm reduced its long-term revenue growth forecast for 2026-2028 to 7.9% from 8.9%, falling below the market consensus of 9.5%. This revision is attributed to anticipated moderation in AI glasses momentum and intensifying competition from major tech players like Google, Samsung, and Apple, along with the introduction of lower-priced smart glasses from Meta. While AI glasses were a significant growth driver, Goldman suggests that future blockbuster launches will be challenging to sustain, potentially shifting EssilorLuxottica's role to lens supply and product distribution rather than primary frame manufacturing.
Beyond market dynamics, internal governance issues and legal challenges have added to the company's woes. A publicly fractured relationship between CEO Francesco Milleri and Leonardo Maria Del Vecchio, son of the founder, has created uncertainty. Furthermore, a criminal complaint filed in Germany by HateAid against Meta's AI-enabled smart glasses, which also names EssilorLuxottica, alleges violations of privacy laws due to potential covert recordings. Although analysts like Louis Billon of AlphaValue believe the impact of this complaint on the group's fundamentals will be limited, and that a slowdown in AI glasses might even be beneficial given their dilutive effect on the business, the confluence of these factors, including a heavy backdrop for the luxury sector, has significantly amplified the stock's underperformance in 2026.
