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Alcon (ALC) Gains From Innovation, Faces FX Challenges

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Alcon Inc. (ALC - Free Report) gains on a strong market rebound. The company’s focus on research and innovation is also encouraging. However, a challenging international market, with the subdued demand for ophthalmological products amid the pandemic, is a concern. The stock carries a Zacks Rank #3 (Hold).

Alcon has outperformed the industry over the past year. The stock has declined 14.8% compared with the industry’s 19.8% fall.

Alcon exited the third quarter with earnings beating the Zacks Consensus Estimate. Despite macroeconomic concerns, the company reported a strong underlying third-quarter performance in its business. Its robust innovation pipeline is delivering solid results, as evident from the strength of its comprehensive portfolio of PCIOLs, including PanOptix and Vivity.

Overall, the Surgical franchise continues to lead the market with its portfolio of advanced technology, intraocular lenses, a substantial installed base of equipment and a growing consumable base. Within Vision Care, ALC showed strong performance with its innovative suite of lenses, including Precision1, Dailies Total1 and Total30.

In terms of end market, in Surgical, global cataract procedures were up in the high single digits in the third quarter. This growth varied significantly by region. In the United States, where surgical centers continue to be constrained by staffing shortages, the procedural volume was relatively flat. Outside the United States, procedures were up in the low teens as markets continued to improve.

Within the Vision Care end market, growth was very dynamic and varied by region. In contact lenses, market growth for the quarter was difficult to read due to the timing of price increases and inventory movements. Based on the available data, Alcon estimates that the overall lens market grew in the mid-to-high-single digits in the third quarter.

Meanwhile, Alcon exited the third quarter with revenues missing the Zacks Consensus Estimate. The third-quarter U.S. dollar sales growth included approximately 700 basis points of pressure from foreign currency. In the quarter, within Implantables, there was a decline in advanced technology intraocular lenses sale in South Korea following a reimbursement change in the first quarter.

Given supply-chain challenges, an unfavorable foreign exchange impact, ongoing inflationary pressure and other macroeconomic headwinds, Alcon reduced its core net sales expectations and tightened its core earnings per share expectations for 2022.

Key Picks

Some better-ranked stocks from the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Boston Scientific Corporation (BSX - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .

AMN Healthcare, which carries a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average beat being 10.9%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AMN Healthcare has dropped 10.6% compared with the industry’s 30.3% decline in the past year.

Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.3%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 1.9%.

Boston Scientific has risen 6.8% against the industry’s 42.6% decline over the past year.

Merit Medical, which carries a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.

Merit Medical has rallied 13.7% against the industry’s 8.7% decline over the past year.

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