11:36 AM EDT, 08/03/2026 (MT Newswires) -- AlphaValue/Baader Europe will adopt "a more conservative" view of EssilorLuxottica (EL.PA) following its second-quarter results, noting that the French eyewear group's development of smart glasses continues to erode its margins. "We were quite positive after 1Q, as we thought the smart glasses hype would progressively fade. However, we were wrong, management continues to invest in this margin-dilutive product. We will update our model to reflect a significant long-term margin decline. Our 'smart glasses' scenario is playing out: [Professional Solutions] is growing, but at a slower pace than [Direct to Consumer], which continues to expand strongly," analysts said Monday. "At the same time, e-commerce performance remains very strong. This is likely to lead to a significant margin decline." In the first half, EssilorLuxottica's adjusted gross margin edged up to 63.5% from 63.4%, which the group mainly attributed to the net positive impact of US import tariffs and the improved profitability of wearable products. "Hence, excluding tariffs, this represents a decline in gross margin. We think the improvement in AI glasses profitability is considering the profitability inside this category, but at group level we think it remains dilutive," the research firm noted. The stock has a buy rating and a price target of 258 euros.

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