(BFM Stock Exchange) – The bank noted its opinion on the optical group this Tuesday, February 11, going from “keeping” to “buy” on the action. The bank appreciates the situation of leader of Essilorluxottica and a consolidator of a very fragmented market, as well as its capacity for innovation.

On the eve of the publication of the annual results of Essilorluxottica, Jefferies sends an important signal of confidence in action.

On the occasion of a transfer of the coverage of the title to a new analyst, the bank noted its advice on the title, going from “keeping” to “buy” this Tuesday, February 11, while enhancing its lens to courses to 310 euros against 195 euros previously. This grants a potential of 14% to the value, during Monday closing.

This recovery of recommendation allows the Essilorluxottica action to win 1.8% around 4 p.m., the second highest increase in CAC 40.

Jefferies appreciates the positioning of the Franco-Italian group, leader in a market of more than 125 billion euros very fragmented. Essilorluxottica has a market share of more than 20%, more than three times more than its closest rival.

The robustness of its cash generation will also give latitudes to the company to carry out targeted acquisitions and thus strengthen its market position.

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“NKTOB”

Jefferies is therefore optimistic about its growth potential, tabling on a “structural” increase in its income between 6% and 8% per year excluding exchange effects, when consensus is around 6% and the company evokes growth “at a low or mid -range figure” (between 2% and 6%).

Jefferies notes that Essilorluxottica has been “pioneer” on the “NKTOB”, that is to say the “new manufacturers of key trend in the optics”.

The bank evokes the key range “Stellest”, glasses intended to correct and brake the progression of myopia in children, and of course on connected Ray-Ban, marketed as part of a partnership with the American group Meta .

Jefferies also mentions the audio nuance range, glasses that correct vision while incorporating hearing aids. Essilorluxottica recently obtained the approval of health authority in the United States for this product and the company will market it in the first quarter in this country. The launch in France, in Germany in the United Kingdom is scheduled for the first half of 2025.

“Nuance and Ray-Ban Meta embody the objective of Essilorluxottica which consists in bringing the eyewear industry into a new era of interconnected and powered by AI devices”, underlines Jefferies.

A valuation that deserves to rise

Several analysts have expressed doubts in the past on the objective of an operating margin adjusted from 19% to 20% in 2026, the target displayed by the company in 2022. Consensus is also 18, 4% on this horizon. Jefferies is appropriate that this goal seems out of reach. But the bank believes that in view of the expectations, “shift the margin target will not frown the markets from the market”.

The establishment also invites us to monitor the United States, where the group achieves around 40% of its sales and or an improvement in consumer confidence would logically benefit the activity of the company.

In terms of valuation, Jefferies stresses that although the action has progressed (+47% over a year) the title still displays a discount of 10% compared to luxury groups. However, over 10 years, this average discount is historically 0%. In other words “a higher valuation” for the action is “justified”, explains the bank.

Before Jefferies, Royal Bank of Canada had passed, at the end of January to “outperformance” on the title, equivalent to buying in its terminology. “Valuation is high, but long -term growth prospects are attractive, thanks to multiple initiatives in terms of products (Meta, Stellest, nuance) which are added to the main activity in the field of optics” then wrote the Canadian Bank.