MW Essilor Luxottica earnings boost illustrates growth potential for Meta's smartglasses

By Jules Rimmer

EssilorLuxottica's sales of the Ray-Ban Meta smartglasses tripled in the first half of 2025, highlighting the huge upside to be derived from the market for AI-wearables.

The extremely bullish growth forecasts for this market, estimated to be worth $166 billion by 2030, explains why last month Meta reportedly took a 3% stake in EssilorLuxottica, with an option to up it to 5%.

The details of the share purchase agreement between Meta and EssilorLuxottica have not yet been made public.

It also explains why EssilorLuxottica's (FR:EL) share price responded so favorably to the second-quarter earnings release with a jump of almost 7% Tuesday.

Although the company's overall quarterly sales growth of 7.33%, marginally above consensus expectations of 7.2%, it is the rapid expansion of the smart glasses range that's engendering such optimism. CEO Francesco Milleri commented that in this area, "sales are really higher than before."

An earnings note published by Jefferies analyst team Tuesday reiterated its EUR300 price objective for EssilorLuxottica, at which level the stock would trade on 40 times its 2026 price-earnings multiple, broadly in line with its peers in the luxury goods sector. According to FactSet, the street's mean target price from the nineteen brokers submitting estimates was EUR272, just 3% above the current stock price. Given seventeen of those recommendations are either buy or hold, it would appear a raft of upgrades is in the offing.

While most of the company's divisions are performing well, it's the collaboration with Meta $(META)$ that will drive the revisions to estimates. The AI eyewear segment underlined its strategic importance by contributing EUR951 million in free cash flow in the first half.

Meta's strategy of investing in and with Essilor looks well-thought out because of the latter's competitive advantages. EssilorLuxottica boasts 17,500 global retail locations and this distribution network cannot be matched by potential competitors in this sector like Apple $(AAPL)$ or Alphabet $(GOOG.UK)$ . It also, as AInvest reports, "sits atop a vast data nexus collecting clinical, retail and biometric data from over 100 million customers annually. Its research and development spend is triple that of its peers, ensuring that it can out-innovate the competition and maintain the first-mover advantage it already commands."

This confers a significant advantage on EssilorLuxottica and Meta compared to pure-play tech firms who may attempt to corner some of that $166 billion market share. EssilorLuxottica aims to manufacture 10 million units by next year with the Ray-Ban model being complemented by similar initiatives with Oakley and Prada.

-Jules Rimmer

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July 29, 2025 07:50 ET (11:50 GMT)

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