Essilux underperforms in the luxury sector, despite the agreement with Applied Materials

(Il Sole 24 Ore Radiocor) - Following the rally over the last few trading sessions, Essilorluxottica has retreated on the Paris Stock Exchange (CAC 40 ), falling in line with the luxury sector, which had otherwise recorded strong gains in recent days.

The company announced yesterday that it had signed an agreement with Applied Materials to bring to market a new generation of smart optical systems for augmented reality and smart glasses with integrated artificial intelligence. “In our view, this is a development in product technology that could enable EssilorLuxottica to maintain its leadership in the AR glasses segment, such as the Ray-Ban Meta Display, by combining its expertise in lenses, frames and smart glasses with Applied Materials’ expertise in materials engineering and advanced technologies,” commented analysts at Equita. According to the brokerage firm, the agreement is “interesting” because one of the market’s main concerns regarding the level of competition in the segment relates to the fact that Essilux still sources certain advanced technological components from third-party suppliers. The agreement, however, appears to be geared towards the joint development of proprietary technologies, although the extent of their exclusivity remains to be clarified. “In our view, the agreement does not affect the partnership with Meta, which concerns software components and applications rather than hardware production,” the analysts added, confirming their “Buy” recommendation on Essilorluxottica shares, with a target price of 290 euros.

Meanwhile, as reported by the Financial Times, Snap - Class A unveiled its AR Glasses at the Augmented World Expo in California; they are set to launch on the US market at a price of $2,195, compared to $799 for the Ray-Ban Meta Display. Snap’s share price fell in after-hours trading, reflecting investors’ concerns about the product’s particularly high price. It should also be noted that Snap’s shares have fallen by almost 40% over the past year, weighed down by concerns regarding the investment required to develop the technology and uncertainty over the ability to sell out, given the complexities involved in both design and distribution.

Investors are also closely monitoring developments regarding the ongoing reorganisation within Delfin, the Del Vecchio family’s holding company and EssilorLuxottica’s main shareholder (it holds a 34 per cent stake in the group). According to reports in Il Sole 24 Ore , an alternative plan is taking shape for Leonardo Maria Del Vecchio, who is reportedly considering various options for the €11 billion mega-loan required to acquire the shares held by his siblings Luca and Paola and thereby increase his stake in the holding company to 37.5 per cent. The entrepreneur is reportedly also in talks with the US fund Apollo Global Management to secure the necessary funding for the deal, as well as with a consortium of banks which, according to rumours, have expressed an interest in financing the project, namely UniCredit, Crédit Agricole and BNP Paribas.