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Glaukos (GKOS) Gains 40.4% YTD: What's Driving the Rally?

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Glaukos (GKOS - Free Report) witnessed strong momentum in the year-to-date period. Shares of the company rallied 40.4% compared with 5.2% growth of the industry. The S&P 500 Composite has risen 11% during the same time frame.

With healthy fundamentals and strong growth opportunities, this Zacks Rank #3 (Hold) company appears to be a solid wealth creator for its investors at the moment.

Headquartered in San Clemente, CA, Glaukos is an ophthalmic medical technology and pharmaceutical company. It is focused on the development and commercialization of novel surgical devices and sustained pharmaceutical therapies designed to treat glaucoma. The company’s flagship iStent is the first FDA-approved surgical device available for insertion in conjunction with cataract surgery.

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Catalysts Driving Growth

The rally in the company’s share price can be attributed to strength in its flagship iStent. The optimism led by a solid first-quarter 2024 performance and robust business potential are expected to contribute further. Moreover, investors are optimistic about continued strong demand across international glaucoma and Corneal Health franchises.

Glaukos reported better-than-expected revenues in the first quarter led by strong demand for its products. Management is excited regarding the company’s continued top-line growth in the first quarter. GKOS has increased its guidance range for 2024. It now expects net sales in the range of $357-$365 million compared with the previous guidance of $350-$360 million. This must have aided in raising the stock’s price.

During the first quarter of 2024, GKOS’s glaucoma franchise witnessed revenue growth driven by its iStent portfolio, which is likely to have boosted the stock’s price. The company has been continuing to make enrollment progress in several clinical trials, which include a PMA pivotal trial for iStent infinite in mild to moderate glaucoma patients.

Investors also seem to be interested in the new product releases that the company offers. In the first quarter of 2024, GKOS commenced the initial phases of the controlled launch plan for iDose TR post its FDA approval. A unique permanent J-code, along with CPT codes for iDose TR, has been assigned by the CMS.

The company continues to invest in its product pipeline. GKOS targets NDA submission for its corneal cross-linking therapy, Epioxa, by the end of 2024, which is currently progressing toward the second Phase 3 pivotal trial completion. The optimism around a potential approval for Epioxa should have supported the rally in share price as well.

Apart from the U.S. market, Glaukos is focusing on expanding globally. It currently sells its products through direct sales subsidiaries in 17 countries and independent distributors in certain countries. The company continues with its efforts to scale its international infrastructure and drive MIGS forward as a standard of care in each region. In the first quarter of 2024, GKOS’ International Glaucoma franchise delivered record sales of $25.2 million, which indicates year-over-year growth of 20% on a reported basis.

Risk Factors

Although Glaukos’ top line is improving, its earnings have been under pressure amid rising costs and expenses in the first quarter. Total operating expenses were $104.4 million, up 17.6% from the prior-year period.

The company currently relies on a limited number of third-party suppliers, in some cases sole suppliers, to supply components for the iStent, the iStent inject models and other pipeline products. If any one or more of these suppliers cease to provide GKOS with enough components or drugs in a timely manner or on acceptable terms, the company would have to seek alternative sources of supply.

A Look at Estimates

Glaukos’ loss per share in 2024 and 2025 is projected to narrow 0.4% and 42.4%, respectively, to $2.26 and $1.30 on a year-over-year basis.  The Zacks Consensus Estimate for loss has widened 2 cents for 2024 but narrowed 3 cents for 2025 in the past 30 days.

Revenues for 2024 and 2025 are anticipated to rise 15.1% and 23.9%, respectively, to $362.3 million and $449.1 million on a year-over-year basis.

Stocks to Consider

Some better-ranked stocks in the broader medical space that have announced quarterly results are Align Technology, Inc. (ALGN - Free Report) , Ecolab (ECL - Free Report) and Boston Scientific Corporation (BSX - Free Report) .

Align Technology, currently carrying a Zacks Rank of 2 (Buy), reported first-quarter 2024 adjusted earnings per share (EPS) of $2.14, which beat the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Align Technology has a long-term estimated growth rate of 6.9%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.

Ecolab, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. ECL’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 1.7%.

Ecolab’s shares have rallied 33.8% against the industry’s 9.3% decline in the past year.

Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank #2.

Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in the trailing four quarters, the average surprise being 7.5%.

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