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Alcon (ALC) Stock Rallies 4.7% Since Posting Q4 Earnings Beat
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Shares of Alcon Inc. (ALC - Free Report) have rallied 4.7% compared the industry's rise of 3.8% since its fourth-quarter 2021 earnings release on Feb 15.
The renowned researcher, developer, manufacturer and distributor of a full suite of eye care products has a market capitalization of $39.46 billion.
This Zacks Rank #2 (Buy) stock has a favorable Growth Score of B. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
The rally was largely driven by Alcon’s year-over-year growth across all sales categories in Surgical and Vision Care. The company’s 2022 guidance with strong growth projections over 2021 also buoys optimism.
Let’s take a quick look at the important catalysts to understand this positive trend.
Key Growth Catalysts
Q4 Upsides: Alcon reported better-than-expected results for fourth-quarter 2021. Year-over-year growth across all sales categories in Surgical and Vision Care was driven primarily by growing demand for new products, solid commercial execution and strong market recovery in the United States. According to the company, strong product flow resulted in revenue growth above the market, which drove core operating leverage and margin expansion. In terms of end market, within Surgical, barring India, which has been slower to recover from the pandemic, global procedures in the fourth quarter were up slow to mid-single digits versus 2019. The margin improvements buoy optimism.
Surgical Business Grows: In the fourth quarter, Total Surgical (consisting of Implantables, Consumables and Equipment/other) reported sales growth of 14% at CER. According to the company, it remained as the market leader in presbyopia correcting artificial intraocular lens (IOLs) on the strength of PanOptix and Vivity. And the penetration of advanced technology lenses continues to increase. In the fourth quarter, Alcon added Hydrus Microstent to its portfolio of implantable devices. Growth in the U.S. market remained relatively consistent with the prior quarter. Growth in international markets saw a solid sequential improvement over the third quarter.
Image Source: Zacks Investment Research
Vision Care Returns to Growth: Total Vision Care (comprising Contact lenses and Ocular health) reported sales growth of 12% at CER. The contact lens market broadly returned to the 2019 levels in the quarter and grew high single-digits, led by the United States. Alcon registered strong performance of PRECISION1 and PRECISION1 for Astigmatism.
Bullish Guidance: Alcon initiated its 2022 guidance, assuming markets to grow over 2021 and in line with historical averages. The company expects net sales in the range of $8.7-$8.9 billion (indicating growth of 7% to 9% at CER over 2021) and core earnings per share (EPS) in the range of $2.35 to $2.45 (growth of 13% to 18%).
Favorable Parameters
For 2022, Alcon has an expected earnings growth rate of 11.63% compared with the industry’s expected growth rate of 7.8%.
Alcon has a net margin of 4.53% compared with the industry’s (16.7%). The stock’s return on equity (ROE) stands at 5.57% versus the industry’s (19.38%).
Other Key Picks
A few other top-ranked stocks in the broader medical space are McKesson Corporation (MCK - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Bio-Rad Laboratories, Inc. (BIO - Free Report) .
McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 49.7% compared with the industry’s 4.7% growth in the past year.
AMN Healthcare, carrying a Zacks Rank #1, has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 23.8% versus the 62% industry decline.
Bio-Rad reported fourth-quarter 2021 adjusted EPS of $3.21, which surpassed the Zacks Consensus Estimate by 11.9%. It currently has a Zacks Rank #2.
Bio-Rad has an earnings yield of 2.3%, which compares favorably with the industry’s negative yield. BIO surpassed earnings estimates in the trailing four quarters, the average surprise being 66.9%.
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Alcon (ALC) Stock Rallies 4.7% Since Posting Q4 Earnings Beat
Shares of Alcon Inc. (ALC - Free Report) have rallied 4.7% compared the industry's rise of 3.8% since its fourth-quarter 2021 earnings release on Feb 15.
The renowned researcher, developer, manufacturer and distributor of a full suite of eye care products has a market capitalization of $39.46 billion.
This Zacks Rank #2 (Buy) stock has a favorable Growth Score of B. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
The rally was largely driven by Alcon’s year-over-year growth across all sales categories in Surgical and Vision Care. The company’s 2022 guidance with strong growth projections over 2021 also buoys optimism.
Let’s take a quick look at the important catalysts to understand this positive trend.
Key Growth Catalysts
Q4 Upsides: Alcon reported better-than-expected results for fourth-quarter 2021. Year-over-year growth across all sales categories in Surgical and Vision Care was driven primarily by growing demand for new products, solid commercial execution and strong market recovery in the United States. According to the company, strong product flow resulted in revenue growth above the market, which drove core operating leverage and margin expansion. In terms of end market, within Surgical, barring India, which has been slower to recover from the pandemic, global procedures in the fourth quarter were up slow to mid-single digits versus 2019. The margin improvements buoy optimism.
Surgical Business Grows: In the fourth quarter, Total Surgical (consisting of Implantables, Consumables and Equipment/other) reported sales growth of 14% at CER. According to the company, it remained as the market leader in presbyopia correcting artificial intraocular lens (IOLs) on the strength of PanOptix and Vivity. And the penetration of advanced technology lenses continues to increase. In the fourth quarter, Alcon added Hydrus Microstent to its portfolio of implantable devices. Growth in the U.S. market remained relatively consistent with the prior quarter. Growth in international markets saw a solid sequential improvement over the third quarter.
Vision Care Returns to Growth: Total Vision Care (comprising Contact lenses and Ocular health) reported sales growth of 12% at CER. The contact lens market broadly returned to the 2019 levels in the quarter and grew high single-digits, led by the United States. Alcon registered strong performance of PRECISION1 and PRECISION1 for Astigmatism.
Bullish Guidance: Alcon initiated its 2022 guidance, assuming markets to grow over 2021 and in line with historical averages. The company expects net sales in the range of $8.7-$8.9 billion (indicating growth of 7% to 9% at CER over 2021) and core earnings per share (EPS) in the range of $2.35 to $2.45 (growth of 13% to 18%).
Favorable Parameters
For 2022, Alcon has an expected earnings growth rate of 11.63% compared with the industry’s expected growth rate of 7.8%.
Alcon has a net margin of 4.53% compared with the industry’s (16.7%). The stock’s return on equity (ROE) stands at 5.57% versus the industry’s (19.38%).
Other Key Picks
A few other top-ranked stocks in the broader medical space are McKesson Corporation (MCK - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Bio-Rad Laboratories, Inc. (BIO - Free Report) .
McKesson, carrying a Zacks Rank #2, reported third-quarter fiscal 2022 adjusted EPS of $6.15, which beat the Zacks Consensus Estimate of $5.38 by 14.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 49.7% compared with the industry’s 4.7% growth in the past year.
AMN Healthcare, carrying a Zacks Rank #1, has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 23.8% versus the 62% industry decline.
Bio-Rad reported fourth-quarter 2021 adjusted EPS of $3.21, which surpassed the Zacks Consensus Estimate by 11.9%. It currently has a Zacks Rank #2.
Bio-Rad has an earnings yield of 2.3%, which compares favorably with the industry’s negative yield. BIO surpassed earnings estimates in the trailing four quarters, the average surprise being 66.9%.