Shares of Ray-Ban had their best day since 2008. Should you buy them?

EssilorLuxottica shares surged 15.5% on Wednesday in Paris and posted their biggest one-day gain since 2008 at the close of trading, according to Reuters. The day before, the maker of Oakley and Ray-Ban reported better-than-expected third-quarter revenue. Steady demand for the company’s core products—traditional eyewear—outweighed signs of a slowdown in smart glasses sales, the agency notes.

The Franco-Italian company’s third-quarter revenue totaled €7.49 billion, slightly exceeding analysts’ consensus estimate of €7.36 billion. Meanwhile, sales of smart glasses—which the company produces in partnership with Meta and which were the key driver of EssilorLuxottica’s stock growth a year ago— — rose 20% year-over-year in the latest reporting period, whereas growth in April–June was nearly 100%, according to Reuters. The slowdown is partly due to a high basis for comparison: a year ago, sales of smart glasses were rising as the market was just gaining momentum.

The company also disclosed, for the first time, the exact revenue of its wearable devices division, which—in addition to smart glasses—includes Nuance glasses with hearing aids (though these account for only a small portion of sales), the agency notes. In the third quarter, revenue totaled €486 million ($546 million), or approximately 6.5% of EssilorLuxottica’s total revenue. For the first nine months, revenue from wearable devices reached €1.26 billion, up 79% (excluding currency adjustments) compared to the same period last year.

Now, however, EssilorLuxottica’s traditional business has become its main driver of growth. “Our vision care, eyewear, and medical technology segments remain a powerful engine of growth: their revenue grew by more than 6% both for the quarter and for the first nine months of the year,” according to a joint statement by the company’s CEO, Francesco Milleri, and his deputy, Paul du Sayen.

In the third quarter, revenue from the traditional Eyecare & Medtech business—that is, all of the company’s segments except for wearable devices—totaled €7 billion, up 6.5% from a year earlier at constant exchange rates. For the first nine months, revenue reached €21.04 billion, an increase of 6.3%.

The company's shares rose 15.5% during trading in Paris on October 21, leading the gains in France's benchmark CAC 40 index, according to Reuters. Year-to-date, they are down more than 35%.

“The upcoming release of Google’s smart glasses will be the first major test [for EssilorLuxottica],” The Wall Street Journal quotes Bernstein analysts as saying. According to them, if competitors’ smart glasses prove compelling at some point—which remains to be seen—EssilorLuxottica’s market valuation will be the first to suffer again.

Morgan Stanley analysts noted last week that “the key challenge” for EssilorLuxottica will be its fourth-quarter sales outlook. They pointed out that a year earlier, the company’s revenue had been bolstered by “significant shipments of Meta’s smart glasses.”

"We believe EssilorLuxottica shares are attractively valued, and that the company's core business offers a degree of protection during this challenging period for the consumer sector," RBC analysts said following the release of the financial results.

Overall, 18 of the 23 analysts covering EssilorLuxottica stock recommend buying it. Four recommend holding it, and only one recommends selling it.

The current surge in the stock price indicates that pressure on the world's largest eyewear manufacturer is easing, according to Reuters. A year ago, the company’s market capitalization reached a record €149 billion ($167 billion), after which its stock price fell by nearly half. According to analysts, the decline began due to investor concerns about corporate governance and the prospects for the smart glasses segment—primarily because of privacy issues and inflated sales expectations, the agency reports.

Last summer, Meta acquired just under 3% of EssilorLuxottica’s shares—a stake worth about €3 billion ($3.5 billion) at market prices—thereby strengthening their partnership in the smart glasses sector, Bloomberg reported, citing sources.

This article was AI-translated and verified by a human editor