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Alcon (ALC) Gains From Innovation & International Expansion

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Alcon (ALC - Free Report) gains on a strong market rebound. The company’s focus on research and innovation is also encouraging. The stock carries a Zacks Rank #2 (Buy).

In Presbyopia-correcting Intraocular Lens (PCIOLs), Alcon currently leads the market with more than 60% of global share and more than 80% share in the United States. In Surgical, the company maintained a strong market share in PCIOLs, solidifying its market-leading position driven by strong demand for products like PanOptix and Vivity despite new market entrants. Vivity's non-defractive properties, ease of use and consistency of surgical outcomes make it particularly appealing.

The company currently sees meaningful share gains driven by its new toric product launches, including Precision1, Total30 and Dailies Total1. It introduced Total30 for Astigmatism in the first quarter. This is the first reusable lens water gradient technology created specifically for astigmatic wearers, and initial customer response has been exceptional. Total30 toric is currently available in the United States and parts of Europe, and Alcon anticipates expanding availability to additional markets throughout 2023.

Alcon’s Surgical business continues to gain from the company’s diverse portfolio and incremental innovation. In Implantables, excluding the impact of the Korea PCIOL reimbursement change, the company is seeing strong growth banking on the Vivity rollout in select international markets, including Japan and Canada. Going by Alcon’s latest update, feedback from surgeons has been extremely positive so far. Vivity is the first-of-its-kind PCIOL that provides patients with monofocal quality distance with excellent intermediate and functional near vision, all with low levels of visual disturbances.

Within Vision Care, Alcon is registering solid growth, banking on strong sales of its contact lenses and ocular health products. In contact lenses, the company is successfully executing its strategy of investing in fast-growing market segments where it has significant share opportunities. As a result of this, Alcon is at present outpacing market growth in every category where it has launched new products.

Within reusable lenses, TOTAL30 and TOTAL30 for Astigmatism are witnessing strong market acceptance.

Yet, Alcon is experiencing inflationary pressures in electronic components, freight, labor, resins and plastics, impacting the company’s margins. The company is also encountering supply-chain challenges in certain components, including microchips, resins and plastics, metals and filters. The company expects these inflationary pressures and supply-chain challenges to continue throughout 2023. The cost of net sales in the second quarter was up 4.1% year over year. Selling, general and administration expenses rose 3.6% year over year.

Meanwhile, the ophthalmology industry is highly competitive, and in both surgical and vision care businesses, Alcon faces intense competition. In the surgical business, Alcon faces a mixture of competitors, ranging from large manufacturers with multiple business lines to small manufacturers that offer a limited selection of specialized products. The company also faces competition from providers of alternative medical therapies, such as pharmaceutical companies, that have the potential to disrupt core elements of its business.

Other Key Picks

Some other top-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , Quanterix (QTRX - Free Report) and SiBone (SIBN - Free Report) . Each of these companies presently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Haemonetics’ stock has risen 15.8% in the past year. Earnings estimates for Haemonetics have increased from $3.56 to $3.74 in 2023 and $3.96 to $4.07 in 2024 in the past 30 days.

HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.39%. In the last reported quarter, it posted an earnings surprise of 38.16%.

Estimates for Quanterix’s 2023 loss per share have narrowed from $1.19 to 97 cents in the past 30 days. Shares of the company have surged 119.6% in the past year against the industry’s decline of 4.2 %.

QTRX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.

Estimates for SiBone’s2023 loss have narrowed from $1.42 to $1.27 per share in the past 30 days. Shares of the company have gained 9.3% in the past year against the industry’s decline of 5.1%.

SIBN’s earnings beat estimates in all the trailing four quarters, the average surprise being 20.37%. In the last reported quarter, SiBone delivered an earnings surprise of 26.83%.

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