We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Alcon, Inc. (ALC - Free Report) delivered core earnings per share (EPS) of 69 cents in the second quarter of 2023, up 9.5% from the year-ago quarter’s figure (up 19% at the constant exchange rate or CER). The figure topped the Zacks Consensus Estimate by 11.3%. Alcon’s “core” results are based on non-IFRS (International Financial Reporting Standards) measures.
In the second quarter, the company’s diluted EPS was 34 cents compared with 30 cents in the prior-year quarter.
Revenues in Detail
Alcon’s net sales to third parties in the second quarter were $2.40 billion, exceeding the Zacks Consensus Estimate by 2.5%. The top line increased 9.2% from the year-ago quarter’s levels (up 12% at CER).
Alcon reports its operations through two reportable segments — Surgical (comprising Implantables, Consumables and Equipment/Other) and Vision Care (comprising Contact Lenses and Ocular Health).
Surgical
In the second quarter, Surgical sales amounted to $1.38 billion, up 6.6% year over year and 10% at CER. Our model projected a year-over-year improvement of 2.8%.
Net sales in Implantables decreased 1.6% compared to the previous year’s quarter. Our model projected a year-over-year improvement of 1.5%.
Consumables increased 10.9%, while Equipment/Other was up 11.1% compared to the previous year’s quarter. Our model projected an improvement of 3.3% and 4% from consumables and equipment/other, respectively.
Vision Care
The segment reported total sales of $1.02 billion, up 12.4% year over year (up 15% year over year at CER). Our model projected a year-over-year improvement of 6.7%.
Net sales of Contact Lenses increased 8.6% year over year, led by continued growth in silicone hydrogel contact lenses, including the Precision1 and Total product families and price increases. Our model’s projected improvement from this segment was 4.3%.
Ocular Health sales increased 19.3% year over year, exceeding our model’s estimate of 10.3%. The growth was primarily driven by the portfolio of eye drops, including acquired ophthalmic pharmaceutical product price increases and the ongoing recovery from supply-chain challenges in contact lens care.
Margins
The cost of net sales in the second quarter was $1.04 billion, up 4.1% year over year. The core gross profit rose 13.4% to $1.36 billion in the reported quarter. The core gross margin expanded 211 basis points (bps) to 56.7% in the second quarter of 2023.
The core operating margin expanded 317 bps in the second quarter to 13%. The growth was primarily driven by a higher gross margin and improved underlying operating leverage from higher sales, partially offset by higher investments in R&D with the acquisition of Aerie.
Financial Position
Alcon exited the second quarter of 2023 with cash and cash equivalents of $661 million compared with $980 million as of Dec 31, 2022.
The cumulative net cash flow from operating activities at the end of the second quarter was $410 million compared with $470 million a year ago. Free cash flow totaled $189 million at the end of the second quarter of 2023 compared with a cash inflow of $233 million a year ago.
2023 Outlook
Alcon provided an updated outlook for the full year.
The company anticipates 2023 net sales in the range of $9.3-$9.5 billion (previously $9.2-$9.4 billion). The revised range suggests growth of 9%-11% at CER from 2022, up from the earlier projected growth of 7%-9%. The Zacks Consensus Estimate for ALC’s revenues is pegged at $9.35 billion.
Core EPS for the full year is expected in the range of $2.70-$2.80 (previously $2.55-$2.65). This indicates growth of 28-32% at CER over 2022, up from the earlier projected growth of 20%-24%. The Zacks Consensus Estimate for Alcon’s 2023 earnings is currently pegged at $2.64 per share.
Our Take
Alcon delivered better-than-expected earnings and revenues in the second quarter of 2023. The robust performance was driven by a competitive product portfolio, favorable market conditions, strong commercial execution and selective price increases. The initial feedback of Vivity is encouraging, which the company introduced in some international markets, including Japan and Canada.
Alcon continued its ATIOL market leadership in the second quarter in the United States and across geographies. In the Vision care franchise, contact lens sales growth was favored by new innovations and contributions from the recent SiHy launches, including PRECISION1 Sphere and Toric, TOTAL30 Sphere, Toric and DAILIES TOTAL1Toric. The expansion of both margins bodes well for the stock. The updated guidance for the full year buoys optimism.
Meanwhile, Alcon expects the gross margin to remain pressured in the remainder of 2023 due to the sales of inventory manufactured at a higher cost base due to inflation. Within Implantables, international growth was partially offset by other market entrants in the United States.
Zacks Rank and Other Key Picks
Alcon currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
Abbott, carrying a Zacks Rank of 2, reported a second-quarter 2023 adjusted EPS of $1.08, beating the Zacks Consensus Estimate by 3.8%. Revenues of $9.98 billion outpaced the consensus mark by 2.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 12.4%.
Elevance Health reported a second-quarter 2023 adjusted EPS of $9.04, beating the Zacks Consensus Estimate by 2.5%. Revenues of $43.38 billion surpassed the Zacks Consensus Estimate by 4.5%. It currently carries a Zacks Rank #2.
Elevance Health has a long-term estimated growth rate of 12.1%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 2.8%.
Intuitive Surgical reported a second-quarter 2023 adjusted EPS of $1.42, beating the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the Zacks Consensus Estimate by 1.4%. It currently carries a Zacks Rank #2.
Intuitive Surgical has a long-term estimated growth rate of 14.5%. ISRG’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 4.2%.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Alcon (ALC) Q2 Earnings Surpass Estimates, Margins Increase
Alcon, Inc. (ALC - Free Report) delivered core earnings per share (EPS) of 69 cents in the second quarter of 2023, up 9.5% from the year-ago quarter’s figure (up 19% at the constant exchange rate or CER). The figure topped the Zacks Consensus Estimate by 11.3%. Alcon’s “core” results are based on non-IFRS (International Financial Reporting Standards) measures.
In the second quarter, the company’s diluted EPS was 34 cents compared with 30 cents in the prior-year quarter.
Revenues in Detail
Alcon’s net sales to third parties in the second quarter were $2.40 billion, exceeding the Zacks Consensus Estimate by 2.5%. The top line increased 9.2% from the year-ago quarter’s levels (up 12% at CER).
Alcon Price, Consensus and EPS Surprise
Alcon price-consensus-eps-surprise-chart | Alcon Quote
Quarter in Detail
Alcon reports its operations through two reportable segments — Surgical (comprising Implantables, Consumables and Equipment/Other) and Vision Care (comprising Contact Lenses and Ocular Health).
Surgical
In the second quarter, Surgical sales amounted to $1.38 billion, up 6.6% year over year and 10% at CER. Our model projected a year-over-year improvement of 2.8%.
Net sales in Implantables decreased 1.6% compared to the previous year’s quarter. Our model projected a year-over-year improvement of 1.5%.
Consumables increased 10.9%, while Equipment/Other was up 11.1% compared to the previous year’s quarter. Our model projected an improvement of 3.3% and 4% from consumables and equipment/other, respectively.
Vision Care
The segment reported total sales of $1.02 billion, up 12.4% year over year (up 15% year over year at CER). Our model projected a year-over-year improvement of 6.7%.
Net sales of Contact Lenses increased 8.6% year over year, led by continued growth in silicone hydrogel contact lenses, including the Precision1 and Total product families and price increases. Our model’s projected improvement from this segment was 4.3%.
Ocular Health sales increased 19.3% year over year, exceeding our model’s estimate of 10.3%. The growth was primarily driven by the portfolio of eye drops, including acquired ophthalmic pharmaceutical product price increases and the ongoing recovery from supply-chain challenges in contact lens care.
Margins
The cost of net sales in the second quarter was $1.04 billion, up 4.1% year over year. The core gross profit rose 13.4% to $1.36 billion in the reported quarter. The core gross margin expanded 211 basis points (bps) to 56.7% in the second quarter of 2023.
The core operating margin expanded 317 bps in the second quarter to 13%. The growth was primarily driven by a higher gross margin and improved underlying operating leverage from higher sales, partially offset by higher investments in R&D with the acquisition of Aerie.
Financial Position
Alcon exited the second quarter of 2023 with cash and cash equivalents of $661 million compared with $980 million as of Dec 31, 2022.
The cumulative net cash flow from operating activities at the end of the second quarter was $410 million compared with $470 million a year ago. Free cash flow totaled $189 million at the end of the second quarter of 2023 compared with a cash inflow of $233 million a year ago.
2023 Outlook
Alcon provided an updated outlook for the full year.
The company anticipates 2023 net sales in the range of $9.3-$9.5 billion (previously $9.2-$9.4 billion). The revised range suggests growth of 9%-11% at CER from 2022, up from the earlier projected growth of 7%-9%. The Zacks Consensus Estimate for ALC’s revenues is pegged at $9.35 billion.
Core EPS for the full year is expected in the range of $2.70-$2.80 (previously $2.55-$2.65). This indicates growth of 28-32% at CER over 2022, up from the earlier projected growth of 20%-24%. The Zacks Consensus Estimate for Alcon’s 2023 earnings is currently pegged at $2.64 per share.
Our Take
Alcon delivered better-than-expected earnings and revenues in the second quarter of 2023. The robust performance was driven by a competitive product portfolio, favorable market conditions, strong commercial execution and selective price increases. The initial feedback of Vivity is encouraging, which the company introduced in some international markets, including Japan and Canada.
Alcon continued its ATIOL market leadership in the second quarter in the United States and across geographies. In the Vision care franchise, contact lens sales growth was favored by new innovations and contributions from the recent SiHy launches, including PRECISION1 Sphere and Toric, TOTAL30 Sphere, Toric and DAILIES TOTAL1Toric. The expansion of both margins bodes well for the stock. The updated guidance for the full year buoys optimism.
Meanwhile, Alcon expects the gross margin to remain pressured in the remainder of 2023 due to the sales of inventory manufactured at a higher cost base due to inflation. Within Implantables, international growth was partially offset by other market entrants in the United States.
Zacks Rank and Other Key Picks
Alcon currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
Abbott, carrying a Zacks Rank of 2, reported a second-quarter 2023 adjusted EPS of $1.08, beating the Zacks Consensus Estimate by 3.8%. Revenues of $9.98 billion outpaced the consensus mark by 2.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 12.4%.
Elevance Health reported a second-quarter 2023 adjusted EPS of $9.04, beating the Zacks Consensus Estimate by 2.5%. Revenues of $43.38 billion surpassed the Zacks Consensus Estimate by 4.5%. It currently carries a Zacks Rank #2.
Elevance Health has a long-term estimated growth rate of 12.1%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 2.8%.
Intuitive Surgical reported a second-quarter 2023 adjusted EPS of $1.42, beating the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the Zacks Consensus Estimate by 1.4%. It currently carries a Zacks Rank #2.
Intuitive Surgical has a long-term estimated growth rate of 14.5%. ISRG’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 4.2%.