EssilorLuxottica Price Target Cut as RBC Notes Smart Glass Margin Pressure

01:59 AM EST, 01/08/2026 (MT Newswires) -- RBC Capital Markets cut EssilorLuxottica's (EL.PA) price target to 320 euros from 340 euros, with an outperform rating, noting the impact of the French eyewear company's wearables segment on its margins. "We reshape our P&L estimates to better reflect Wearables impact, particularly on gross margins (we estimate 30 [basis point] dilution impact for each 1 [percentage point] revenue mix), partly offset by higher revenues and slightly better [operating expenses] leverage, limiting absolute earnings cuts to 5% in FY25E and 4% in FY26E. EL should print strong 4Q25/FY25E results given Wearables Gen-3 launch contribution and healthy core momentum; however, RBC estimates are 5% below consensus earnings as we anticipate higher margin dilution," analysts said Thursday. Looking ahead, the research firm raised its full-year 2026 revenue assumptions on the expected rise in wearables contribution, particularly the Ray-Ban smart glasses co-developed with Meta Platforms (FB2A.F). RBC increased its volume forecast for the glasses to 11.6 million units from 10 million units, with an implied revenue growth contribution of 8.4%, against 5.1% previously. As a result, analysts expect the group's 2026 organic revenue to grow 12.2%, compared with 10.3% earlier, driven by increased production capacity and "positive commentary" from Meta regarding the demand for its Display product in the US amid current supply constraints.