On Wednesday, BTIG signaled confidence in Alcon Inc. (NYSE: NYSE:ALC) by raising its price target from $96.00 to $98.00, while reaffirming a Buy rating on the stock. The firm highlighted Alcon's consistent performance, noting that the company achieved approximately 6.0% constant currency (xFx) growth, with both its Surgical and Vision Care segments growing by 6% on a constant currency basis.
Alcon's core earnings per share (EPS) exceeded expectations by $0.01, although gross margins (GMs) and operating margins (OMs) were both slightly below consensus by 50 basis points (bps) and 30 bps, respectively. A supply quality issue impacted gross margins by 120bps, which, if resolved, could have added $0.04 to $0.05 to adjusted EPS and improved operating margins by the same amount.
The company has maintained its full-year 2024 (FY24) guidance, projecting revenue between $9.9 billion and $10.1 billion, representing a 7% to 9% growth at constant currency, and an adjusted EPS of $3.00 to $3.10.
BTIG anticipates that Alcon could potentially set its guidance above FY24 levels, driven by the launch of new product cycles. The firm suggests that the current market expectation of approximately 6.6% top-line growth for FY25 may be conservative, and anticipates upward revisions to projections for FY25 and beyond. The price target increase is based on these 12-24 month projections.
Alcon Inc. reported Q2 earnings that surpassed expectations, with adjusted earnings per share of $0.74, beating the consensus forecast. However, the company's revenue of $2.48 billion fell short of projected $2.53 billion. Despite this, Alcon maintained its full-year 2024 guidance, projecting adjusted earnings per share of $3.00 to $3.10 and revenue of $9.9 billion to $10.1 billion. Stifel maintains a positive outlook on Alcon, emphasizing the company's long-term potential and upcoming products.
Similarly, Citi reaffirmed its Buy rating for Alcon, expecting a multi-year cycle of product introductions leading to a rise in earnings per share from 2025 to 2027. Both firms' analyses suggest that despite short-term challenges, strategic developments in the pipeline are expected to drive Alcon's growth in the coming years.
InvestingPro Insights
As Alcon Inc. (NYSE: ALC) receives a favorable outlook from BTIG, several metrics and InvestingPro Tips provide a deeper financial perspective on the company's recent performance and market position. Alcon has demonstrated a commendable track record of raising its dividend for the past four years, indicating a commitment to returning value to shareholders. Additionally, the company has been trading at a low P/E ratio relative to near-term earnings growth, suggesting a potentially attractive valuation for growth-oriented investors.
From a financial data standpoint, Alcon's market capitalization stands strong at $46.89 billion, with a P/E ratio of 42.31 and a forward-looking PEG ratio of just 0.22, highlighting an intriguing balance between price and earnings growth. Revenue growth in the last twelve months as of Q1 2024 was 7.68%, aligning closely with the company's full-year guidance for 2024. Moreover, the company's gross profit margin remains robust at 55.67%, despite the supply quality issue that temporarily impacted margins.
InvestingPro also notes Alcon's position as a prominent player in the Healthcare Equipment & Supplies industry, with liquid assets exceeding short-term obligations and a moderate level of debt. These factors could reassure investors of the company's financial stability. For those seeking more insight, there are additional InvestingPro Tips available on Alcon's profile, which can be found at InvestingPro's dedicated page for Alcon.
Investors considering Alcon for their portfolios may find these insights and the additional tips on InvestingPro to be valuable resources in their decision-making process.
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