Luxottica Group S.P.A. Receives a Buy from Credit Suisse

By Carrie Williams

Credit Suisse analyst Catherine Tillson reiterated a Buy rating on Luxottica Group S.P.A. (NYSE: LUX) today and set a price target of $50. The company’s shares closed last Friday at $51.68.

Tillson said:

“We got further reassurance that the company should meet at least the bottom end of FY16 guidance of 2-3% org. growth, in line with consensus expectations. Therefore we believe Q4 will not see the series of earnings downgrades into the results, as we saw into Q2/Q3. Reassurance that the new initiatives will only be short-term headwinds. We believe the drag on sales of MAP in the US and the removal of third-party distributors in China will roll over in 2H17, once annualized. Additionally, we see these initiatives as positive signs that management is willing to put in place strategies to clean up distribution, leveraging its strong brand portfolio in the correct way. We believe this should put the company back on a mid- single-digit growth path, with top-line accelerating through FY17. New Ray-Ban mono-brand stores could be the answer for China. The company has lagged in China over the past decade but management’s focus on turning the region around over the past year may now be coming to fruition. The new strategy of Ray-Ban mono-brand concept stores appears to be gaining traction with comps growing double digit and plans to expand from less than 40 stores (Sept) to 70 by year-end.”

Luxottica Group S.P.A. has an analyst consensus of Hold.

Based on Luxottica Group S.P.A.’s latest earnings report for the quarter ending December 31, the company posted quarterly revenue of $2.18 billion and quarterly net profit of $108 million. In comparison, last year the company earned revenue of $2.4 billion and had a net profit of $222 million.

Luxottica Group SpA engages in the design, manufacture, and distribution of fashion, luxury, sport, and performance eyewear. It operates through the Manufacturing and Wholesale Distribution and Retail Distribution business segments. The Manufacturing and Wholesale distribution segment specializes in the production and sale of its house brands and designer lines of mid to premium-priced prescription frames, sunglasses, and sports eyewear. The Retail Distribution segment operates through the marketing of its retail brands which include LensCrafters, Sunglass Hut, OPSM, Laubman & Pank, Oakley O Stores and Vaults, David Clulow, GMO, and its licensed brands Sears Optical and Target Optical. The company was founded by Leonardo del Vecchio in 1961 and is headquartered in Milan, Italy.