Eye Care Giant Alcon Poised for Growth as New Surgical Platform Rolls Out
Investment research firm MOI Global Equity Research has published a bullish deep-dive on Alcon Inc. (NYSE: ALC), arguing the Swiss eye care leader is undervalued as it prepares to launch a new generation of surgical equipment. The report, featured on Latticework's Substack, frames Alcon as a quality-growth story in a resilient healthcare sector.
Alcon, spun off from Novartis in 2019, dominates the $35 billion global eye care device market. It operates two core divisions: Surgical (approx. 56% of sales) and Vision Care (44%). The bullish thesis centers on the company's durable competitive advantages and a significant upcoming product cycle.
The Surgical segment, contributing about 60% of earnings, is the cornerstone. Its "razor-and-blade" model—anchored by an installed base of roughly 28,000 surgical systems—drives high-margin, recurring revenue from consumables and implantables like the premium PanOptix and Vivity intraocular lenses. This creates significant switching costs for hospitals and provides long-term cash flow visibility.
"The real catalyst is the multi-year replacement cycle for the UNITY surgical platform," the report notes. This new system is designed to improve hospital efficiency and economics, with analysts projecting it could help push Alcon's operating margins toward the 20-25% range over time.
Meanwhile, the Vision Care business (contact lenses, solutions) benefits from long-term demographic trends like an aging population. Alcon has steadily gained market share here, growing from 11.7% globally in 2020 to 13.5% in 2024.
Despite a recent stock price decline of about 8.7% since a separate bullish coverage in late 2024—attributed to broader market valuation compression—the core growth narrative remains intact. MOI's analysis emphasizes improving financial metrics, with Return on Invested Capital (ROIC) rising sharply from 6.1% in 2021 to 14.0% in 2024, a trend the firm believes the market still undervalues.
Their valuation model, assuming ~7% annual revenue growth and applying a 20x P/E multiple, suggests a potential price range of $65 to $138 per share. With shares recently trading around $72, the report posits an attractive risk-reward profile as the UNITY rollout gains momentum.
Investor Perspectives:
"Alcon is a classic 'pick-and-shovel' play in healthcare," says Michael Tan, portfolio manager at Horizon Capital. "You get exposure to elective procedure growth without single-product risk. The margin expansion story tied to UNITY is particularly convincing."
"The valuation still gives me pause," argues Sarah Chen, an independent healthcare analyst. "A forward P/E over 22 for a medtech company? They need to execute flawlessly on this platform launch to justify it. Any delay or lukewarm hospital adoption will punish the stock."
"As someone who's worn their contact lenses for years, seeing them translate that brand trust into surgical dominance makes sense," comments David Rivera, a private investor. "It feels like a steady compounder in a volatile market."
"Forgive me if I'm not doing cartwheels over a 14% ROIC," says a skeptical fund manager who requested anonymity. "This is a capital-intensive business that was spun off with baggage. Show me sustained 20%+ ROIC and then we'll talk about a premium multiple. Until then, it's just hope tied to a new product launch."
Alcon was held by 41 hedge funds at the end of Q3 2024, up from 34 the prior quarter, according to Insider Monkey's database. It did not, however, rank among the site's 30 Most Popular Hedge Fund Stocks.