Analysts at Barclays view the recent slide in EssilorLuxottica (EPA:ESLX) stock as an opportune moment to buy, reaffirming an Overweight rating on the owner of Ray-Ban amid ongoing headwinds for smart glasses distribution in Europe.
Recent press coverage has flagged delays to the European launch of the Ray-Ban Display glasses, a product developed in partnership with Meta Platforms Inc (NASDAQ:META). Reported constraints include supply issues and regulatory obstacles tied to battery requirements and AI-related rules that apply in the European Union.
One prominent regulatory requirement set to take effect by 2027 mandates that devices sold in the EU must include removable batteries. Barclays and other market observers note that integrating removable battery compartments creates engineering trade-offs: the added space can limit battery capacity or force compromises in other device features.
According to the reporting cited by analysts, Meta is engaged in discussions with EU authorities as it seeks an exemption for smart glasses developed by Meta and other manufacturers. The situation attracted broader attention when the U.S. ambassador to the EU, Andrew Puzder, mentioned at an event that the glasses would not be available in the region.
Barclays underscored that demand in the U.S. had already exceeded supply, and that uncertainty around regulatory specifics - particularly removable battery rules - could affect the emerging category more broadly. Despite these immediate constraints, the bank maintained that the U.S. market is expected to be the principal near-term growth engine for the Display product.
The analysts project that the Display product will remain a relatively small contributor in the near term, estimating it will represent just 2% of group sales in 2025 under their forecasts. They acknowledged European limitations - such as restricted AI functionality and narrower use cases - but judged these obstacles to be manageable over time.
On privacy and related risks, the Barclays team led by Hassan Al-Wakeel wrote: "We continue to expect privacy risks to ease over time," pointing to improving safeguards and public awareness as the ecosystem evolves.
Looking beyond near-term hurdles, Barclays highlighted the potential upside from deeper integration of smart glasses and artificial intelligence. The analysts said core features including audio, video and AI voice assistants are already present in existing devices, while developing augmented reality capabilities could enable practical use cases like navigation, language translation and live information overlays.
Barclays further projects that wearables could become a dominant growth driver for EssilorLuxottica, estimating that such products might account for more than half of group growth through 2030, supported by rapid increases in both unit volumes and revenue contribution.
Weighing these factors collectively, the analysts concluded that the recent de-rating of EssilorLuxottica shares makes the stock an attractive entry point. "We see the recent de-rating in the shares as a key buying opportunity: EssilorLuxottica remains a key OW with what we see as unmatched growth and upside optionality in EU MedTech & Services," they wrote.
What this means
- Barclays retains an Overweight stance on EssilorLuxottica and views the pullback as a buying opportunity.
- Short-term distribution and regulatory hurdles in Europe are constraining the launch of smart glasses developed with Meta, but the U.S. remains the primary short-term growth market.
- Longer-term prospects hinge on wearables and AI-enabled features becoming meaningful contributors to group growth through 2030.