Alcon Inc ALC is seeing a rebound in its Surgical and Vision Care businesses. Also encouraging is the company’s focus on research and innovation. The stock currently carries a Zacks Rank #2 (Buy).
Alcon has outperformed the industry over the past year. The stock is up 9.4% compared to industry growth of 0.9%.
In the surgical space, the company remains the market leader in presbyopia correction IOLs due to the strength of PanOptix and Vivity. In the fourth quarter of 2021, Total Surgical (consisting of Implantables, Consumables and Equipment/Other) reported CER revenue growth of 14%. According to the company, it is currently the market leader in presbyopia correction IOLs based on the strength of PanOptix and Vivity. The penetration of lenses with advanced technology continues to increase. The global cataract surgery market was relatively consistent with the sequentially most recently reported quarter. In the fourth quarter, Alcon added Hydrus Microstent to its implantable device portfolio.
In vision care, Alcon continues to see strong demand for its latest mainstream contact lenses, PRECISION1 and PRECISION1 for Astigmatism. In terms of the surgical end market (excluding India which has been slower to recover from the pandemic), global procedures were up in the low to mid single digits in the fourth quarter compared to pre-pandemic 2019 vision care end market , the contact lens market, broadly returned to 2019 levels in the fourth quarter and grew in the high single digits, led by the US.
In terms of innovation, the company added Hydrus Microstent to its portfolio of implantable devices in the surgical space in the fourth quarter. Hydrus represents an exciting opportunity in the large and rapidly growing mild to moderate glaucoma market.
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In the device business, the company benefits from product placements of phaco devices, the Active Sentry handpiece, the LuxORRevalia microscope and the Argos biometer. The company also introduced the latest version of Cataract Connectivity with SMARTCataract.
In Vision Care, Alcon is expanding its contact lens offering into the premium and mid-market segments by launching a steady stream of new silicone hydrogel products for everyday use and reusable products. The company is currently experiencing strong demand for its latest contact lenses for the mainstream market, PRECISION1 and PRECISION1 for Astigmatism.
On the other hand, in terms of the end-market within surgery, in the fourth quarter of 2021, global cataract procedures declined in the low single digits compared to 2019. Growth on the international markets was still slow to recover. Within Vision Care, the growth rates of the contact lens market in the international markets are still lagging behind the United States due to the different pace of market recovery.
Challenging international markets with subdued demand for ophthalmic products amid pandemic are a concern. A tough competitive landscape is also a threat.
Some stocks in the broader medical space for investors to consider are Owens & Minor, Inc. OMI, NextGen Healthcare, Inc. NXGN and McKesson Corporation McK.
Owens & Minor has a long-term earnings growth rate of 8.8%. Owens & Minor’s earnings beat estimates over the past four quarters, delivering an average surprise of 29.5%. It currently carries a Zacks rank #2. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks can be found here.
Owens & Minor has outperformed the industry over the past year. OMI is up 12.8% over the period compared to an industry decline of 16.7%.
NextGen has an estimated long-term growth rate of 5%. NextGen’s earnings beat estimates over the past four quarters, with the average surprise coming in at 17.5%. It currently carries a Zacks rank #2.
NextGen has outperformed the industry over the past year. NXGN is up 15.5% compared to the industry’s 38.3% decline over the past year.
McKesson has a long-term earnings growth rate of 11.8%. McKesson’s earnings beat estimates over the past four quarters, delivering a 20.6% surprise on average. It currently carries a Zacks rank #2.
McKesson has outperformed the industry over the past year. MCK is up 67.8% over the period compared to industry growth of 7.7%.
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