BofA warns Fed risks policy mistake with early rate cuts
Investing.com - BofA Securities reduced its price target on Alcon Inc. (NYSE:ALC), a $40.3 billion healthcare equipment giant, to $100 from $109 while maintaining a Buy rating following the company’s recent profit warning. According to InvestingPro data, analyst targets for the stock range from $80 to $123, with a strong consensus recommendation of 1.67 (Buy).
The stock dropped 9% Wednesday after Alcon warned of soft surgical procedure volume and increasing competitive pressure, which prompted the analyst adjustment. The stock is now trading near its 52-week low of $80.48, though InvestingPro analysis indicates the company maintains a GOOD overall financial health score.
BofA cut its fiscal year 2025 earnings per share estimate by only 3% as a lower tax rate offset the more pronounced operating profit reduction, but lowered its fiscal year 2026 earnings per share forecast by 6%.
The firm expects 5% constant currency sales growth in the third quarter as Unity’s roll-out continues and implantables competitive pressure begins lapping, though tariff impact may limit sequential margin expansion.
BofA anticipates higher growth of 7.4% in constant currency for the fourth quarter despite prolonged soft surgical market development, driven by Unity and initial contributions from dry eye treatments, potentially triggering margin expansion of 40 basis points year-over-year.
In other recent news, Alcon Inc. has faced several adjustments to its financial outlook and analyst evaluations. The company revised its fiscal year 2025 revenue guidance to $10.3-$10.4 billion, indicating a growth rate of 4-5% excluding foreign exchange effects, down from a previous expectation of 6-7%. This revision has led to a series of price target reductions from various analyst firms. Wells Fargo (NYSE:WFC) lowered its price target to $88, maintaining an Equal Weight rating, while Mizuho (NYSE:MFG) reduced its target to $110, citing slower growth in the eye-care market. Stifel adjusted its price target to $90 following Alcon’s second-quarter results that missed top-line expectations, although it kept a Buy rating on the stock. Bernstein SocGen also decreased its target to CHF84.50, noting repeated guidance downgrades. Additionally, BTIG lowered its price target to $92, despite Alcon posting core earnings per share of $0.76 and exceeding expectations in gross and operating margins. These developments reflect challenges in Alcon’s Surgical segment and a general slowdown in market growth.
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