Equity Research: The case of EssilorLuxottica SA

This Equity Research Report presents a detailed valuation of EssilorLuxottica SA as part of the Master’s in Finance final work project at ISEG – Lisbon School of Economics and Management. The document has been prepared in accordance with the recommendations of the Chartered Financial Analyst (CFA) Institute. The choice of EssilorLuxottica SA was motivated by multiple reasons, including the company’s significant size following the recent merger between Essilor and Luxottica, as well as personal interest in the luxury fashion, specifically on the eyewear segment. The information displayed on the report is based on public data available as of 10th October 2024, the valuation date. The valuation and forecast were conducted through the Discounted Cash Flows (DCF) model, specifically the Free Cash Flow to Firm (FCFF) approach. Additionally, the analysis incorporated the Dividend Discount Model and a Relative Valuation through multiples. The forecast was based on assumptions to project and estimate the target price of EssilorLuxottica SA by December 31, 2025. The final price target, based on the FCFF, is estimated at €230.32 per share by the end of 2025, implying an upside potential of 9.9% compared to the price as of October 10, 2024. Considering this and the company's low-risk profile, the final recommendation is to Hold.