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Here's Why You Should Retain Glaukos Stock in Your Portfolio Now

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Glaukos Corporation (GKOS - Free Report) is well-poised for growth on the back of favorable clinical trial results and a robust product pipeline. However, stiff competition is a concern.

Shares of this Zacks Rank #3 (Hold) company have risen 49.7% year to date compared with the industry’s 5.4% growth. The S&P 500 Index has also increased 15% in the same time frame.

Glaukos, with a market capitalization of $7.1 billion, is a leading ophthalmic medical technology and pharmaceutical company. It projects earnings growth of 3.5% for 2024, followed by 37.3% growth in 2025, and expects to maintain its strong performance in terms of revenues as well.

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The company has a trailing four-quarter average negative earnings surprise of 5.62%.

Key Catalysts

Strong Product Demand:The rise in Glaukos' share price can be attributed to the strength of its flagship product, iStent. Strong performance in the first half of 2024, coupled with a positive business outlook, has fueled investors’ optimism. Demand in the company's international glaucoma and Corneal Health franchises remains strong, further boosting confidence.

During the second-quarter earnings call, Glaukos highlighted the growing utilization of iStent infinite for glaucoma patients, particularly among those who have not responded to medical or surgical treatments. This growth is supported by ongoing clinical education and an improving market access landscape. Additionally, five of the seven Medicare Administrative Contractors (“MACs”) have issued draft local coverage determinations (LCDs) for iStent infinite that is expected to improve patient access to the product.

Glaukos exceeded revenue expectations in the first half of 2024, driven by strong demand for its products. The company raised its full-year revenue guidance to $370-$376 million from the previous estimate of $357-$365 million. This has contributed to the upward trend in the company’s share performance.

Expanding Product Portfolio:The iStent portfolio significantly boosted Glaukos' glaucoma franchise revenues during the first half of 2024. Additionally, the launch of iDose TR in the second quarter is expected to further enhance revenue growth in the second half of the year. A permanent J-code for iDose TR, effective from July 1, will likely increase patient access and drive future sales.

Glaukos continues to invest in its product pipeline, including its corneal cross-linking therapy, Epioxa, which is expected to undergo NDA submission by the end of 2024. Epioxa is progressing through its second Phase 3 pivotal trial. The company is also preparing for a pivotal study on its next-generation iDose therapy, iDose TREX, slated to begin by the end of 2024. These initiatives are likely to drive long-term growth.

Internationally, Glaukos is focused on expanding its footprint. The company sells its products through subsidiaries in 17 countries and independent distributors in other markets. Glaukos' international glaucoma franchise reported record sales of $51.4 million in the first half of 2024, reflecting an 18.3% year-over-year growth. This global expansion will likely continue to support the company's long-term growth trajectory.

What’s Hurting GKOS?

Glaukos currently relies on a limited number of third-party suppliers, in some cases sole suppliers, to supply components for the iStent, the iStent inject models and other pipeline products. If one or more of these suppliers cease to provide the company with sufficient quantities of components or drugs in a timely manner or on acceptable terms, it would have to seek alternative sources of supply.

Glaukos' production of the iStent, iStent inject models and other products in development depends on a select group of third-party suppliers, occasionally exclusive ones. If any of these suppliers fail to deliver the necessary components or drugs in a timely manner or on acceptable terms, Glaukos would be compelled to find other suppliers to maintain its production line.

Estimate Trend

The bottom-line estimate for GKOS is pegged at a loss of $2.19 per share for 2024, which narrowed 5 cents in the past 60 days. The Zacks Consensus Estimate for 2024 revenues is pinned at $374 million, indicating growth of 18.8% from the top line recorded in 2023.

Stocks to Consider

A few better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Quest Diagnostics Incorporated (DGX - Free Report) and Boston Scientific Corporation (BSX - Free Report) .

DaVita, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 17.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 24.2%. Its shares have risen 53.9% compared with the industry’s 22.5% growth in the past year.

Quest Diagnostics, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 6.2%. DGX’s earnings surpassed estimates in each of the trailing four quarters, the average being 3.3%.

Quest Diagnostics’ shares have risen 16.2% compared with the industry’s 22.5% growth in the past year.

Boston Scientific, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 12.6%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.

Boston Scientific’s shares have surged 47.7% compared with the industry’s 13.9% growth in the past year.

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