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Glaukos (GKOS) Gains 63.5% YTD: What's Driving the Stock?

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Glaukos (GKOS - Free Report) has witnessed strong momentum in the year-to-date period. Shares of the company have surged 63.5% compared with 9.1% growth of the industry. The S&P 500 composite has risen 17.4% during the said 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-half 2024 performance and robust business potential, is expected to contribute further. Moreover, investors are optimistic about continued strong demand across international glaucoma and Corneal Health franchises.

Per the second-quarter earnings call, utilization of iStent infinite for glaucoma patients continues to expand among patients who have failed medical and surgical therapy on the back of ongoing clinical education efforts and improving market access landscape. Moreover, five of the seven MACs issued draft LCDs that established coverage for iStent infinite. This will likely increase patient access.

Glaukos reported better-than-expected revenues in the first half, led by strong demand for its products. Management is excited regarding the company’s continued top-line growth in the second quarter. GKOS has raised its guidance for 2024. It now expects net sales to be in the range of $370-$376 million compared with the previous guidance of $357-$365 million. This must have boosted the stock’s uptrend.

GKOS' glaucoma franchise witnessed growth in revenues during the first half of 2024, propelled by its iStent portfolio. This has driven the company's stock price. Moreover, additional contributions following the iDosse TR launch in the second quarter are likely to boost top-line growth in the second half of 2024. The unique permanent J-code for iDose TR became effective from Jul 1, and is likely to increase patient access, thereby driving sales growth for iDose TR going forward.

GKOS continues to invest in its product pipeline. It targets NDA submission for its corneal cross-linking therapy, Epioxa, by the end of 2024. Epioxa is currently progressing toward the second Phase 3 pivotal trial completion.

The company remains on track to start a pivotal study on its next-generation iDose therapy, iDose TREX, by the end of 2024. These developments are likely to drive long-term growth.

Apart from the U.S. market, Glaukos intends to expand 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 half of 2024, GKOS’ International Glaucoma franchise delivered record sales of $51.4 million, which indicates year-over-year growth of 18.3% on a reported basis.

Risk Factors

The company currently sources components for the iStent, the iStent inject models, and other pipeline products from a small number of third-party suppliers and occasionally from a single supplier. 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

The Zacks Consensus Estimate for Glaukos’ 2024 and 2025 loss per share projects a 4% and 37.1%year-over-year improvement, respectively, to a loss of $2.18 and $1.37 per share.

The consensus estimate for 2024 loss per share has moved down 3.1% in the past 30 days.

Revenues for 2024 and 2025 are anticipated to rise 18.4% and 25.7%, respectively, to $372.7 million and $468.4 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 DaVita (DVA - Free Report) , Aspen Technology (AZPN - Free Report) and Universal Health Services (UHS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

DaVita has an estimated long-term growth rate of 17.5%. DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 24.2%.

DaVita’s shares have risen 43.4% year to date compared with the industry’s 14.3% growth.

Aspen Technology has an estimated long-term growth rate of 13.1%. AZPN’s earnings surpassed estimates in two of the trailing four quarters and missed the same twice, the average surprise being 4.24%.

Shares of Aspen Technology have lost 4.2% year to date against the industry’s 13.5% growth.

Universal Health Services has an estimated long-term growth rate of 19%. UHS' earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.58%.

The company’s shares have risen 48.6% year to date compared with the industry’s 39.7% growth.

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