Needham Initiates Alcon Citing 'Visible Path to Sustainable Double-Digit EPS Growth'

Needham is initiating coverage on Alcon AG ALC with a Buy rating and a $95 price target.

• The analysts believe Alcon has visibility into sustainable mid-single-digit or better revenue growth driven by key implantable products, contact lenses, and ocular health. 
• Margin improvements are expected to be driven by manufacturing, product mix, and opex leverage.
• The analysts estimate Alcon can see above-peer EPS growth through 2024. 
• Related: Alcon's Q4 Earnings Surpass Expectations, Proposes CHF 0.20/Share Dividend.
• "We believe recent advanced technology IOL (AT-IOLs) launches could help ALC's Implantables segment grow faster than the market's 6% pace. Analysts write that every ~100 bps increase in AT-IOL market penetration translates into $100 million in revenue (~120 bps to ALC's growth)."
• Premium contact lens launches are expected to result in mid-to-high single-digit growth. 
• Needham expects the mid-single-digit or better revenue growth and steady adjusted operating margin improvement in their estimates will support a 13.6% EPS CAGR from 2021 through 2024. 
• Price Action: ALC shares are down 0.30% at $81.01 during the market session on the last check Friday.