Shares of EssilorLuxottica SA declined about 2% on Monday following a revision by Goldman Sachs to the eyewear group's full-year revenue growth outlook.
Goldman now projects organic revenue growth of 8.5% for 2026, down from its previous forecast of 10.8%. The firm said the downgrade reflects a "more uncertain consumer environment" and "also takes into account tough comps" in the third and fourth quarters, which will make year-on-year comparisons more challenging.
The bank expects adjusted EBIT margins to contract on a year-over-year basis during the first half of 2026, forecasting a margin of 16.9% in that period. Goldman attributed the anticipated contraction "primarily to FX and dilution from Wearables." The broker clarified that its estimates do not incorporate any impact from tariff refunds.
For the second quarter, Goldman Sachs estimated revenue of 2.80 billion, a figure it said is 0.6% below consensus. For the first half of the year, the firm forecast adjusted EBIT of 2.57 billion, which it described as roughly 6% ahead of consensus.
Alongside these operating adjustments, Goldman trimmed its 12-month target price for EssilorLuxottica to 230 from 260, while maintaining a "buy" rating on the stock. The firm said the lower target reflects a higher weighted average cost of capital, increased to 8.8% from 8.3%, a reduced terminal growth rate of 3% from 3.5%, and a smaller target price-to-earnings multiple of 28 times, down from 35 times.
Goldman noted that shares have derated materially from a post-Q3 2025 peak - moving from around 40x next-twelve-months P/E in November to roughly 22x NTM P/E now - and said it believes the current valuation is disconnected from its growth outlook.
On forward-looking estimates, the broker said it has cut organic revenue growth assumptions by 200 to 300 basis points per year for the 2026 through 2028 period. Those reductions are partially offset by margin upgrades, with Goldman indicating adjusted EBIT would change versus its prior projections by +4% in 2026, +2% in 2027 and -2% in 2028.
Goldman listed a range of downside risks that could weigh on the companys outlook. These include a slowdown or delayed rollout of new product launches, less operational leverage than expected, disruption across the retail network, and softer-than-anticipated consumer confidence.
On the positive side, the broker pointed to EssilorLuxotticas wearables portfolio as a potential source of sustained momentum beyond 2026. That portfolio includes the recently announced Meta glasses, manufacturing of wearables in Italy, and a distribution agreement with Best Buy, factors Goldman said could support that business segment.
Summary
Goldman Sachs has cut EssilorLuxotticas organic revenue growth forecast for 2026 to 8.5% from 10.8% amid growing consumer uncertainty and difficult comparable quarters. The firm also lowered its 12-month price target to 230 from 260, raised its WACC to 8.8%, reduced terminal growth to 3%, trimmed its target P/E to 28x, and kept a buy rating. Goldman expects a first-half 2026 adjusted EBIT margin of 16.9%, driven by FX and Wearables dilution, and outlined both downside risks and potential upside from the wearables business.
Key points
- Goldman cut 2026 organic revenue growth to 8.5% from 10.8% due to a more uncertain consumer environment and tough year-over-year comps.
- The broker lowered its 12-month price target to 230 from 260, while maintaining a buy rating and raising the weighted average cost of capital to 8.8%.
- Goldman expects H1 2026 adjusted EBIT margin to fall to 16.9%, citing foreign exchange headwinds and dilution from the wearables business; it also adjusted multi-year revenue and EBIT forecasts for 2026-2028.
Risks and uncertainties
- Potential delays or slowdowns in new product launches or rollouts could damp growth prospects - a risk for the consumer discretionary and retail sectors tied to eyewear and wearables.
- Lower-than-expected operational leverage or disruption in retail networks could weigh on margins and earnings performance, affecting retail operators and suppliers in the eyewear supply chain.
- Weakening consumer confidence could reduce demand across eyewear and related retail channels, impacting sales and broader consumer-facing segments.
Market reaction
Shares of EssilorLuxottica fell around 2% on the day the revisions were published, reflecting investor sensitivity to the lowered growth outlook and the changes to valuation assumptions.