Alcon Inc. ALC is expected to report first-quarter 2023 results shortly.
In the last reported quarter, the company’s earnings per share (EPS) of 42 cents were in line with the Zacks Consensus Estimate. Moreover, its earnings surpassed the consensus estimate in the remaining three of the trailing four quarters. The average earnings surprise was 12.37%.
Let's see how things have shaped up before the announcement.
Factors at Play
Similar to the fourth quarter of 2022, strong commercial execution, new product launches and demand from resilient markets are expected to have contributed to the top line during Alcon’s first quarter.
Alcon’s Surgical business is expected to have been boosted by its Presbyopia-Correcting Intraocular Lens (PC-IOLs) portfolio on the strength of Hydrus Microstent and Vivity.
Alcon Price and EPS Surprise
Alcon price-eps-surprise | Alcon Quote
Moreover, over the past few quarters, ALC continues to witness the strong penetration of advanced technology lenses with the expansion of the global cataract surgery market. Alcon’s newest launch of Clareon Toric IOL expanded its robust portfolio of astigmatism-correcting options for cataract patients in the United States. This highly differentiated material has been well received in the market and is expected to have contributed to increasing the market share in the first quarter.
As part of the strategic alliance with California-based MOVU, Alcon continues to grow its footprint globally in ophthalmic operating rooms, with the ARGOS biometer. On the fourth-quarter 2022 earnings call, the company noted the positive response received for ARGOS, citing its higher capture rates and enhanced workflow efficiency to improve patient outcomes.
In 2022, Alcon expanded its presence in surgical glaucoma with the acquisition of Ivantis, which also brought Hydrus Microstent to its portfolio of implantables. Hydrus’ long-standing clinical efficacy data demonstrates the sustained reduction in medication use and the decreased need for secondary glaucoma surgery.
In addition, Alcon’s comprehensive cloud-based platform SMARTCataract, garnered an impressive response from surgeons, over its ability to generate significant time savings during the cataract evaluation, planning, operating room and postoperative workflows. All these developments are expected to have contributed to Alcon’s top line in the first quarter of 2023.
However, we believe the ongoing geopolitical, macroeconomic and supply-chain headwinds are likely to have persisted during the first quarter, thus affecting Alcon’s top line.
The Zacks Consensus Estimate for first-quarter 2023 Surgical revenues is pegged at $1.27 billion. This suggests a decline of 0.6% from the previous quarter’s reported figure.
Within Alcon’s Vision Care segment, both contact lens and ocular health franchises are expected to have contributed to the first quarter’s top line.
The company continues to receive favorable market feedback for its portfolio of innovative lenses and is focused on expanding its contact lens offerings. During the fourth-quarter 2022 earnings call, Alcon envisioned its toric lens portfolio to be one of the fastest-growing segments of the contact lens market.
Alcon’s latest launch of TOTAL30 reusable water gradient lens for astigmatic contact lens wearers has been gaining market share. Simultaneously, in the premium DAILIES lens market, customer response for the company’s DAILIES TOTAL1 disposable toric lens for astigmatism has been encouraging. We believe that these developments are likely to have benefited Alcon in the to-be-reported quarter, thus adding to the top line.
The ocular health segment is likely to have performed well in the first quarter of 2023, due to a wide range of SYSTANE preservative-free dry eye relief products, including HYDRATION PF, Ultra and Complete.
In November 2022, ALC strengthened its presence in the ophthalmic pharmaceutical space with the acquisition of Aerie Pharmaceuticals, Inc. Through the transaction, Alcon added commercial products — Rocklatan and Rhopressa— and a pipeline of ophthalmic pharmaceutical product candidates, leveraging Aerie’s existing research and development capabilities. The acquisition is expected to have significantly benefited Alcon’s ocular health franchise in the first quarter.
However, similar to the fourth quarter of 2022, we believe Alcon is likely to have met with ongoing supply-chain challenges in the to-be-reported quarter, affecting its revenue growth.
The Zacks Consensus Estimate for the company’s first-quarter 2023 Vision Care revenues is pegged at $955 million. This suggests an improvement of 8.4% from the previous quarter’s reported figure.
The Estimate Picture
For the first quarter of 2023, the Zacks Consensus Estimate for total revenues of $2.23 billion implies an improvement of 2.4% from the prior-year quarter’s figure.
The consensus estimate for the EPS is pegged at 60 cents, indicating a fall of 11.8% from the prior-year quarter’s figure.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has a higher chance of beating estimates. However, that is not the case here, as you can see below:
Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: ALC currently carries a Zacks Rank #3.
Stocks Worth a Look
Here are a few medical stocks worth considering, as these have the right combination of elements to post an earnings beat this quarter.
Insulet PODD has an Earnings ESP of +70.21% and sports a Zacks Rank #1. The company will release first-quarter 2023 results on May 04. You can see the complete list of today’s Zacks #1 Rank stocks here.
Insulet has an expected earnings growth rate of 56.6% for the next year. PODD has an earnings yield of 0.41% compared with the industry’s -3.02%.
Henry Schein HSIC has an Earnings ESP of +0.99% and a Zacks Rank #2. Henry Schein is expected to release first-quarter 2023 results on May 2.
HSIC has an expected long-term earnings growth rate of 8.10%. The company’s earnings yield of 6.58% compares favorably with the industry’s 4.46%.
BioRad Laboratories BIO currently has an Earnings ESP of +0.16% and a Zacks Rank #2. BioRad is scheduled to release first-quarter 2023 results on May 4.
BioRad has an expected earnings growth rate of 12.76% for the next year. BIO has an earnings yield of 3.53% compared with the industry’s -3.02%.
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