EssilorLuxottica Faces Dual Blow as Kepler Slashes Target and Paris Prosecutors Open Smart Glasses Probe

Kepler Cheuvreux downgraded EssilorLuxottica to Reduce, cutting its target to EUR 135 on a sharply lower smart glasses forecast and governance concerns.

Kepler Cheuvreux pulled the rug out from under EssilorLuxottica on Thursday, downgrading the stock from Buy to Reduce and hacking its price target down to EUR 135 from EUR 244. The catalyst: a brutal revision to the broker's smart glasses forecast, which now envisions just 15 million units sold in fiscal 2030 — down from an earlier estimate of 38 million. Analyst Cuglietta's note also flagged margin pressure and governance concerns as contributing factors.

The market's response was swift. Shares slid as much as 3% to EUR 140.70 intraday before closing at EUR 141.10, a decline of 3.0% that left the stock just 0.2% above its 52-week low of EUR 139.30. The sell-off extends a rough stretch: the equity has shed 4.6% over the past seven days and 14% across 30 days. Year-to-date the damage stands at 48%, with a 49% decline over the trailing twelve months.

A Criminal Probe Lands on the Same Day

The downgrade was not the only unwelcome headline. International media reported Friday that the Paris public prosecutor's office has opened a criminal investigation into alleged sexual harassment involving smart glasses. The case centers on women who were filmed without their consent, with the footage reportedly circulating online afterward. France's data protection authority, the CNIL, confirmed it has received fewer than ten complaints related to smart glasses in the workplace.

The investigation strikes directly at the Meta-partnered eyewear line in which EssilorLuxottica holds a major stake. Those glasses command roughly 76% of the global market, with seven million units sold in 2025. The company had projected "exponential growth" for 2026 — precisely the narrative Kepler Cheuvreux now calls into question.

Under French law, covert filming without consent in private spaces carries penalties of up to one year in prison and fines reaching EUR 45,000.

Regulatory pushback is hardly confined to France. Cinemas in the UK have banned smart glasses outright, a criminal complaint against Meta has been filed in Germany, and Australia is weighing a prohibition on the devices in government workplaces. That growing international resistance threatens to dampen consumer and enterprise adoption — a risk Kepler Cheuvreux has effectively priced in with its steep volume cut.

UBS Stands Its Ground

Not every house is running for the exits. UBS reaffirmed its Buy rating on EssilorLuxottica the same day, offering no comment on the downgrade. The divergence between the two investment banks underscores just how unsettled the long-term outlook for the smart glasses division has become.

Meanwhile, the company continues to expand its traditional optics footprint. In Malaysia, EssilorLuxottica signed an agreement to acquire optical chains A-Look, Seen and OWL, which together operate more than 90 stores. Financial terms were not disclosed, and the deal is expected to close by the end of June 2025 subject to customary conditions.

The Fundamentals Still Tell a Different Story

For all the gloom, the operating picture remains sturdy. In the first half of 2026, revenue grew 9.7% at constant currency, adjusted operating profit rose 15%, and the margin climbed to 18.9%. Free cash flow hit EUR 1.067 billion — the strongest in five years.

Those figures sit awkwardly beside a share price hovering near its annual low, with an RSI of 24.3 signaling deeply oversold conditions. The question for investors is not whether the core business works, but whether the market will extend credit to that substance while governance questions and future bets like smart glasses remain unresolved.

Management has already moved to shore up confidence. The board unanimously backed CEO Francesco Milleri and authorized a share buyback program of up to 5,000,000 shares.

The clinical pipeline beyond wearables is intact as well. Twenty-four-month data on the Stellest lens for myopia control in children were published in JAMA Ophthalmology — the first peer-reviewed publication on an FDA De Novo-cleared spectacle lens technology of its kind.

Should the governance debate cool, the stock's steep discount to its 200-day moving average of EUR 204.16 could become a compelling entry point.

What Could Go Wrong

The bear case deserves equal weight. Kepler Cheuvreux explicitly cites governance concerns as grounds for its downgrade — an issue that will not resolve itself with a single quarterly report. Repeated board endorsements of management suggest internal friction that the company has so far answered only with votes of confidence.

If the smart glasses growth story unravels further — the cut from 38 million to 15 million units by 2030 is nothing short of drastic — the stock loses one of its central future arguments. With 30-day volatility at 24% and the share price 13% below its 50-day moving average, downside risk remains real should other houses follow Kepler's lead.

The Road Ahead

As long as the operating momentum shown in the half-year report holds and no fresh governance escalations emerge, the combination of an oversold chart and robust fundamentals points to a potential stabilization near current levels. But if the smart glasses narrative deteriorates further or new leadership questions surface, the downtrend could resume — an RSI of 24.3 signals oversold conditions but hardly guarantees a reversal.

The next concrete test will be the upcoming quarterly earnings report, which must demonstrate whether the margin expansion and revenue growth seen in the first half can persist through the governance turbulence.