Merryll Lynch confirms Luxottica buy recommendation

At the end of August, Merryll Lynch analysts reiterated their 'buy' recommendation for the Luxottica share which, they maintain, is undervalued by about 20% compared to the one-year target price, fixed at 16 euros per share.

According to the experts, Luxottica will be able to seize the opportunities for recovery that may arise over the next year. Particularly in the US, where the company belongs to the category of luxury goods, any appreciation of the dollar and stabilization of the economy could benefit the Del Vecchio group.

The analysts also estimate that by 2004 Luxottica will have completely recovered from the lower revenues caused by the non-renewal of the Armani license thanks to recent agreements with Versace and Prada, without forgetting that the acquisition of Opsm should create cost synergies and strengthen its presence on the Australian market.

In the Merryll Lynch evaluation model, which took the agreement with Prada and the acquisition of the Australian chain into consideration, revenues for the two-year period 2004-2005 should grow on average by 10% and net profits by about 12%.