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
Companies: EssilorLuxottica SA
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
As both the French and the Italian groups accused each other of trying to gain the upper hand at EssilorLuxottica’s leadership, the governance crisis has become uglier and the stock slumped c.6% on 21 March 2019 to hit a two-year low.
The pain aggravated when the executive chairman of EssilorLuxottica, Leonardo Del Vecchio (also the biggest shareholder of EssilorLuxottica and founder of Luxottica), accused its deputy, Hubert Sagnieres (vice chairman of the new entity and ex-CEO of Essilor) of a
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In its first Litmus test after an ‘ambitious’ CMD in June 2021, the British giant has put up a decent show. The group witnessed recovery in the base business, particularly in vaccines which benefited from the sales of COVID-19 vaccine adjuvant. While the near term continues be tricky due to resurfacing COVID-19 concerns, encouraging trends on the COVID-19 vaccine / treatment front and growing HIV and oncology prowess should calm the nerves.
Companies: GlaxoSmithKline plc
Cambridge Cognition has released a very encouraging H1 update which was well ahead of our forecasts and we have upgraded our FY21 revenue estimate by +19%. Order intake in the period leapt +74% to £8.6m (H1 2020: £4.9m), including £6.4m of previously-announced large orders, including two very significant wins totalling £3.6m. H1 revenues rose +50% to £4.5m, well ahead of DCe £3.8m and the group delivered Adjusted EBITDA of £0.2m vs DCe breakeven. Customer prepayments from contracts resulted in a
Companies: Cambridge Cognition Holdings Plc
A positive trading update for H1 2021 prompts full-year upgrades to forecasts and provides the basis for the introduction of FY 2022 forecasts. H1 2021 sales orders increased 74% to £8.6m; up from £4.9m in H1 2020, with a 50% increase in revenues and a £0.5m increase in adjusted EBITDA to £0.2m. A record contracted order backlog (up 36% or £4.0m from 31 December 2020 to £15.2m), which contains several large contracts with revenues to be recognised over up to six years, provides improved long-ter
In Q2, Astra reported strong sales growth momentum, (again) driven by a strong showing in oncology, diabetes drug Farxiga and COVID-19 vaccine sales. Although there were some issues in R&I and CVRM. More importantly, at cost vaccine sales and mandatory VBP discounts in China weighed on profitability. While the profitability strain can sustain in H2 as well, one should find confidence from the robust potential of core pharma offerings and the addition of high-growth and excellent-margin Alexion,
Companies: AstraZeneca PLC
Smith & Nephew reported consensus beating Q2 21 sales growth of 40.3%, thanks to a strong recovery in Orthopaedics (+43.4%) and ‘sports medicine & ENT’ (+50.9%). Regionally, growth was driven by the established markets (+46.8%).
For H1, revenue growth came in at 27.8% with a trading margin of 17.6% (+920bps, 40bps ahead of consensus). Guidance of 10%-13% top-line growth and an 18%-19% trading margin was re-iterated.
Following the broadly in-line performance, we do not expect any significant ch
Companies: Smith & Nephew PLC
What a difference a year makes - 12 months ago, the focus, quite understandably, was on the course of the pandemic and the lifting of the Lockdown (1) measures. For investors, it was the sustainability of the rally in markets seen since March 2020. Today, while we are still thinking about the lifting of lockdown measures, we are also concerned about two “old favourites” from previous decades. Inflation and the parlous state of public finances. The BoE has said that although CPI inflation rose to
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ANGLE announced its second pharma services contract with an undisclosed drug development company, using Parsortix firstly to develop two custom CTC assays to look at biomarkers of DNA damage repair, for which it will be paid c.$0.4m and, secondly, if successful, to use these validated assays for longitudinal analysis in a subsequent clinical trial planned to start in H2 2022. The revenue from the first phase of the contract is expected to be recognised over a 12-month period. ANGLE also confirme
Companies: ANGLE plc
Semper Fortis Esports* recently announced its intention to IPO onto the Access Segment of the Aquis Stock Exchange Growth Market. Semper is a multi-operational Esports organisation focusing on gaming technology solutions, brand enhancement and high growth team infrastructures. The company plans to raise £2.5m to develop their three core areas of establishing an esports team, forming partnerships with brands for sponsorship and B2B consultancy services. The Board are highly experienced in spor
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Companies: PureTech Health PLC
Doctor Care Anywhere Group's (DOC) Q221 update highlights that underlying revenue has continued to increase, driven by its expanding internet hospital and subsequent growth in diagnostic referrals. Management remains confident that FY21 revenue will be at least 100% above FY20 levels, implying a total revenue of at least £23.2m. Its balance sheet remains strong with net cash of £31.5m. The expected Q421 launch of its digitally integrated virtual and in-person primary care service with Nuffield H
Companies: Doctor Care Anywhere Group PLC Shs Chess Depository Interests Repr 1 sh
In our second edition of “Trend spotting” we note how in the last three weeks the defensive rotation trend has gathered pace and further evidence has emerged of the “relative fading” in the UK economy. However we now see early signs of the “risk on” trend starting to reassert itself in equity markets and we look at small cap laggards plus European exposure as ways to play this.
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Whilst Clinigen is paying a full price to establish a European platform, the fit is very good. It should make the Clinical Trial Services division more robust and provide a platform to drive the Unlicensed and Commercial Medicines offerings into Europe. Revenue synergies across the group could be material over time. We push through modest EPS upgrades (1%/3%) and increase our TP to 1213p (from 1157p). We remain attracted to the growth opportunity (as highlighted in our Pharma Services sector not
Companies: Clinigen Group Plc
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SDL delivered a better than forecast H1, outperforming sales and AOP estimates. Revenues moderated by just 1% to £180.7m, with AOP up 1% to £16.3m. Increased demand from strongly performing verticals (Online Retail, Technology) has offset declining volumes from CV19 impacted sectors (Leisure, Travel, Automotive). KPIs continue to move in the right direction, with ARCV rising 7% y/y, and Linguistic Productive Utilisation stable at 67%. The Group delivered 60 new technology customer wins in H1, an
Companies: RWS Holdings plc
AMTE Power, a developer and manufacturer of lithium-ion battery cells for specialist markets, announced its intention to seek admission to trading on AIM. Admission is expected to take place during March 2021. The Company intends to raise approximately £7 million by way of a placing of new ordinary shares in the capital of the Company. Timing TBC. Samarkand Group Limited, the cross-border eCommerce technology and retail group opening up the world's largest market for brands and retailers, intend
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