Ray-Ban maker's shares jump as strong eyewear sales temper AI glasses worries

Oct 21 — EssilorLuxottica shares rose more than 14% on Wednesday after the Ray-Ban ​maker beat third-quarter revenue expectations, with resilient demand for its core eyewear products outweighing signs of moderating growth in smart glasses.

The move is ‌a sign of easing pressure on the world's largest eyewear company, whose stock has nearly halved in ⁠price after reaching a record market ​value of €149 billion ($167 billion) a year ⁠ago.

Analysts say the slump began as investors raised concerns over governance and the ‌company's nascent smart glasses ‌business, particularly around privacy and sales expectations.

EssilorLuxottica's shares were up 14% ⁠by 1005 GMT, leading gains on France's ⁠CAC 40 benchmark index and heading for their largest one-day jump since 2008.

"The prospect of smart glasses disrupting traditional eyewear will likely stay as a sword of Damocles hanging over EssilorLuxottica," Bernstein analysts said in a note to investors.

With Alphabet's Google set to launch its Gemini AI glasses by ‌the end of 2026, it "makes sense for EssilorLuxottica to ​espouse a conservative message" on fourth-quarter expectations, they added.

ANALYSTS SAY VALUATION IS ATTRACTIVE

Third-quarter revenue at the Franco-Italian company was €7.49 billion, beating the €7.36 billion expected by analysts.

But unlike previous quarters, sales of Ray-Ban smart glasses made with Meta slowed down compared with rates seen earlier in the year, while EssilorLuxottica's core eyewear business was the main growth driver.

The maker of Oakley and Ray-Ban ​frames also broke out revenue from its wearables business, which includes AI glasses and ‌Nuance hearing devices, ‌for the ⁠first time. By fully disclosing last year's figures, the company faces a tougher comparison base in the fourth quarter, helping explain its cautious outlook, Bernstein said.

Analysts also say that last year's selloff has left EssilorLuxottica trading at an attractive valuation, creating ‌a buying opportunity.

"We view ​EL shares as attractively valued and offering ‌defensive core attributes in a ⁠challenging consumer ​environment," RBC analysts said.

($1 = 0.8911 euros)

(Reporting by Gianluca Lo Nostro; Editing by Jan Harvey and ​Milla Nissi-Prussak)

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