EssilorLuxottica’s Q3 performance was ahead of our as well as market estimates. Positive momentum was witnessed in both business segments (PS and DTC). Once again, the top-line growth (at constant currency) was led by North America. We do not expect the global supply-chain issues to impact considerably a vertically-integrated and innovation-led firm like EL. The improved outlook is also reassuring for the investor community. We will improve the estimates and target price.
Companies: EssilorLuxottica SA
Benefiting from the strong market recovery, EssilorLuxottica witnessed an acceleration in sales in Q2 with optical growing faster than the sun category. Interestingly, the outperformance was led by the US-heavy retail business. Wholesale also witnessed a step-up, though it lagged due to its European exposure. Robust sales growth and strict cost management ensured a beat on profitability too. Given the sturdy results, the FY21 outlook has been raised. With GrandVision now in the bag and governanc
After two failed attempts, EssilorLuxottica has finally won the legal battle against GrandVision. While the French-Italian giant now has the option to pull the plug on the deal without paying any penalties, we believe it would instead go-ahead with the deal but at a lower price. Importantly, EssilorLuxottica now has an upper hand to renegotiate terms and, considering that GrandVision is no longer in a position to dictate the terms, it might agree a lower price.
2021 has got off to an encouraging start with the group capitalising on the rebound in the US and Chinese markets. Interestingly, strong momentum was visible in prescription lenses and optical retail and sun business was also back on track. Note that Q1 21 sales reported growth above Q1 19 levels and management is now confident to deliver a FY21 performance at least comparable to pre-pandemic levels. The integration process continued to gain momentum and full-year synergy targets were reiterated
Sales (at CER) were back in the black in Q4 20, driven by the resilience of the lenses segment and the acceleration in the retail segment, led by e-commerce. Management believes that the business environment will begin to normalise from Q2 21 and, combined with an innovative product pipeline, it has the ambition to deliver a performance comparable to pre-pandemic levels. Importantly, the governance structure is being overhauled and Del Vecchio is set to tighten his grip over the company.
The Q3 beat was driven by the ‘resilient’ lenses segment. Wholesale saw a significant improvement, led by the independent channel, and retail bounced back with optical banners and e-commerce leading the pack. Developed markets returned to positive growth while emerging markets remained a drag. A further acceleration was visible in October but, due to fresh lockdowns, the management remains prudently confident. With optical considered as an ‘essential’ category, the sales impact could be less sev
As expected, Q2 was worse than Q1 with sales plummeting 46.1%. However, revenue hit a trough in April, followed by a marked sequential recovery in May and June. Lenses saw almost flat sales in June, benefiting from pent-up in demand for prescription products and new product launches. Retail is approaching normalcy on the back of progressive improvements in traffic and higher conversion rates. Wholesale is a bit behind, though the progressive recovery of independents and key accounts should provi
Q1 was weak as the solid growth witnessed in January-February was offset by a material decline in March due to COVID-19. Despite the acceleration in online sales, Q2 should be worse. However, considering that c.70% of group sales are exposed to resilient optical prescription products, one could see a pent-up in demand when the situation normalises. Early signs from China have been encouraging and, if the recovery is solid, the board might consider a special dividend, though the FY19 dividend has
FY19 ended on a high with an acceleration in sales in Retail, Wholesale and Sunglasses and a steady show in Lenses in Q4. However, given the COVID-19 outbreak, momentum could lose pace in H1 20. Margins should also remain in check as the benefits of synergies would be reinvested into future growth opportunities. Unfortunately, a fraud at the Thailand plant has brought governance issues at the forefront once again. Nonetheless, a go-ahead for the GrandVision deal should come on time.
EssilorLuxottica witnessed a robust acceleration in sales in Q3 (+5.2% at CER), driven by new product launches in the lenses business, good dynamics in retail (both offline and online) and steady growth in fast-growing markets. However, the wholesale business lost pace due to softer demand in the Asia-Pacific region. Given 9M 19 sales of +4.3% and considering the ongoing launch of the next-gen Transitions lens in other countries, the FY19 sales growth target of +3.5-5% is comfortably within reac
EL is likely to outpace the eyewear/eyecare industry in the mid/long term, driven by a shift towards an integrated network business model and an increasing focus on innovation and digitalisation. Geographically, the fast-growing markets would be a key source of growth, benefiting from a growing middle class. Growth in profits would be higher than sales on the back of operational leverage, favourable product mix and synergies from the mega-merger.
Sales momentum accelerated in Q2 led by lenses, sunglasses and wholesale, though retail saw a deceleration. Given the new product launches, momentum is likely to accelerate further in H2 and thus the FY19 sales targets seem attainable. As anticipated, profitability slumped in H1, due to an increased marketing spend to support new product launches and, given the seasonality of the business, we foresee margin compression on a sequential basis. Note that the EssilorLuxottica integration process has
After putting lenses into frames, EL’s decision to augment the retail presence, particularly in Europe, looks like a strategic move. Given that EL and GV have limited business overlap, the antitrust approvals should be obtained in a timely fashion. Also, the integration process between the French and Italians is now in full swing and the amalgamation of GV should be smooth, given Luxottica has a history of incorporating retail networks. With so much on its plate, the appointment of a new CEO has
EssilorLuxottica is considering a takeover of Dutch eyewear retailer, GrandVision. Although the deal seems a good strategic fit, given GrandVision’s mass market business model and increasing focus on emerging markets, we have concerns with respect to the potential integration of the deal. Anti-trust authorities might also be a spoilsport once again.
A decent Q1 in which Luxottica witnessed acceleration in sales, driven by retail, while Essilor lost pace, due to unfavourable weather in the US. Given the new product launches, which are backed by effective marketing campaigns, Q2 has got off to a good start and we anticipate an acceleration in sales from hereon. Re-activation of the bolt-on acquisition strategy would provide a further push. With FY19 financial targets within reach and synergies now in execution mode, we eagerly await the upcom
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Interim results to 30 September were marked by a return to pre-pandemic sales levels for the core business, with revenues rising 81% to £5.7m, which included c.£1.2m of COVID-related revenues. An adjusted EBITDA loss of £2.4m reflected the incremental costs of gearing up to supply the DHSC with COVID-19 antigen tests, which did not materialise. With the contract with DHSC now having expired, focus turns to other commercial opportunities. The core Health & Nutrition EBITDA of £1.15m covered the c
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ECO’s overweight exposure to China continues to have a bearing on the short term outlook, with volatile pork prices impacting on demand and forward visibility. Whilst prices have rebounded strongly off their lows, stability is needed to restore the market to equilibrium. Trading in the rest of the world remains more positive and in line with expectations. After downgrading at the AGM in September, we push through further China-related downgrades, the net impact is -37% at the EPS level this year
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Interims results reflect the high level of Group corporate activity, but also a better performance on cash preservation with the Group incurring lower expenditure. In H1, focus was on evolving the business with a NASDAQ listing and the collective £23.8m (net) refinancing; in H2 attention turns back to the clinical pipeline. We await important topline efficacy Part A data from the Phase I/II of MRx-4DP0004 in asthma - a moment that may validate the live biotherapeutic approach in asthma. We also
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A positive AGM update from CVS this morning shows an excellent start to FY22, reporting strong 12.4% LFL sales growth. This reflects both the secular tailwind from a growing UK pet population and the continuing focus on optimal patient care/working-up of cases. The company does not comment on the CMA enquiry relating to a recent small acquisition. This is to be expected given the restriction terms under CMA guidelines. The transaction itself is not material in terms of scale. Importantly, the pr
Companies: CVS Group plc
NetScientific (NSCI), the international life sciences and sustainability technology investment and commercialisation group, has arranged an investment of $1m (ca. £0.75 million) into EpiBone Inc, a Life sciences portfolio company. EpiBone is an innovative regenerative medicine company developing a pioneering technology offering a transformational approach to personalised bone graft development for skeletal repair. NSCI's latest investment in EpiBone comprises $734k from its own balance sheet and
Companies: NetScientific plc
H1 EBITDA declined by 45% YoY, albeit this was slightly better than we had anticipated after the pre-close update in August. The beat was cost related (efficiencies/savings). There was a significant gross margin drag though and, while transitory in nature and diminishing in H2, this means further savings need to be realised to hit full year forecasts. This is our view and we retain a good level of confidence in next year’s forecasts. Having de-rated, valuation looks very undemanding now on just
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ADM Energy* 1.7p £2.7m (ADME.L)
Fundraise and Issue of Equity to Raise £475,000 at 1.5p and Business Update by the natural resources investing company. Conditional Issue of 6,666,667 warrants with an exercise price of 3p each for a period of two years from Admission. Subscriptions by five Directors amounting to £175,000 at the placing price. Additional conversion by debt holders, consultants and service providers equating to £228,500 at the placing price. The funds will be used
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Shield Therapeutics is a UK-based company actively and directly marketing its approved product, Accrufer, in the US. In Europe, it is branded as Ferracru and marketed by partner Norgine. Accrufer is an effective oral product to treat iron deficiency (anaemia). Accrufer is positioned against ineffec
Companies: Shield Therapeutics Plc
Bivictrix 26.5p £17.5m (BVX.L)
BiVictriX Therapeutics, an emerging biotechnology company applying a novel approach to develop next generation cancer therapies using insights derived from frontline clinical experience announced a collaboration to manufacture BiVictriX's antibody-drug conjugates with Abzena Limited, a partner research organisation for integrated discovery to cGMP manufacturing solutions for biologics. The collaboration will allow BiVictriX to cost-effectively manuf
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On track to meet FYApr22E profit forecasts, as investment in chronic condition management solutions accelerates
The digital clinical decision support company has announced its unaudited interim results for the half year ending 31 October 2021. Revenue for the six-month period has held well at £1,618,439 (2020: £1,716,424). Profit before tax is £21,427 (2020: £150,556) and profit after tax £137,352 (2020: £224,825). DXS finished the period with cash on hand of £543,000.
DXS commented that result
Companies: DXS International Plc
Novo Nordisk reported strong Q3 results, with growth again driven by the GLP-1 diabetes portfolio and launch euphoria for Wegovy (obesity drug). Interestingly, management upgraded its 2021 guidance for the third straight quarter. While the group continues to make sound progress in the diabetes market, with its ever-increasing global market share, lack of immediate growth catalysts beyond the largely mature diabetes market is a key impediment. Hence, our recommendation remains cautious.
Companies: Novo Nordisk (NOVO-B:CPH)Novo Nordisk A/S Class B (NOVO.B:CSE)
Shield Therapeutics (STX) successfully launched its key asset, Accrufer (oral ferric maltol for iron deficiency), in the US market on 1 July, in line with previous guidance. The US commercialisation of Accrufer is key to unlocking value (the US iron market is a huge market at ~10 million patients per year and is the key value driver) and FDA approval in 2019 led to the broadest possible label, which encompasses iron deficiency from any cause. The H121 results reported total revenue of £0.5m enti
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Petershill Partners (PHLL.L), has joined the Main Market (Premium), a leading investment group providing bespoke capital and strategic solutions to some of the world's best performing alternative asset management firms. Petershill Partners today comprises minority investments in 19 high-quality Partner-firms, previously held in private funds managed by Goldman Sachs Asset Management (GSAM). The Partner-firms have US$187 bn of aggregated assets under management. The Offer would comprise (
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