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On Thursday, STAAR Surgical (NASDAQ:STAA) saw its price target increased by Canaccord Genuity from $17.00 to $20.00, while the firm kept a Hold rating on the stock. Currently trading at $19.44, the company maintains a "GOOD" overall financial health score according to InvestingPro data, despite eight analysts recently revising their earnings expectations downward. STAAR Surgical, known for its EVO ICL (TASE:ICL) products, reported a challenging first quarter but provided an optimistic outlook during the earnings call. Despite withdrawing financial guidance due to macroeconomic uncertainty and management changes, the company’s leadership expressed confidence in a potential turnaround in China, STAAR Surgical’s largest market, in the second half of 2025.
The company’s management has indicated that they expect to meet the previously set guidance of $75M-$125M in revenue from China for the fiscal year 2025. With current revenue at $313.9 million and a -2.64% growth rate in the last twelve months, STAAR Surgical anticipates returning to revenue and adjusted EBITDA growth in the latter half of the year, though InvestingPro analysis suggests sales may decline in the current year. Analysts at Canaccord Genuity acknowledged the company’s positive outlook but emphasized the need for execution, especially given the uncertainties in China and the broader challenges facing aesthetic and elective procedures globally.
STAAR Surgical has been experiencing solid growth outside of China, but these markets are not large enough to significantly impact overall top-line growth. The company maintains strong financial flexibility with a healthy current ratio of 5.23 and more cash than debt on its balance sheet. Get deeper insights into STAAR Surgical’s financial health with InvestingPro’s comprehensive research report, available along with 12+ additional exclusive ProTips. The new management team at STAAR Surgical has taken steps to mitigate challenges, including implementing cost-cutting programs to improve long-term profitability and creating consignment inventory with Chinese distributors to avoid tariffs. Additionally, the company is accelerating its Swiss manufacturing operations to potentially offset any long-term tariff impacts.
The company’s EVO ICL product remains highly regarded, but Canaccord Genuity suggests that investor sentiment is likely to remain cautious until the situation in China shows signs of stabilization. Based on InvestingPro’s Fair Value analysis, STAAR Surgical is currently trading near its fair value, with analyst price targets ranging from $13 to $27. At that point, the focus may shift to the viability of the company’s commercial operations in the United States. The updated price target reflects the firm’s revised expectations and continued monitoring of STAAR Surgical’s performance in the face of current market conditions.
In other recent news, STAAR Surgical reported a challenging first quarter for 2025, with earnings per share (EPS) at -$1.10, significantly missing the forecast of -$0.58. However, the company’s revenue exceeded expectations, reaching $42.6 million compared to the anticipated $40.33 million. STAAR Surgical experienced a substantial decline in sales in China, with figures dropping to $389,000 from $38.5 million the previous year, impacting overall performance. Despite this, sales outside China grew by 9%, indicating resilience in other markets. The company has withdrawn its previous financial guidance but aims for profitability in the second half of 2025, with a focus on normalizing sales in China by the third quarter. STAAR Surgical is also planning to launch a new product, the EVO Plus (V5) lens, in China by mid-2025. Analysts have not recently upgraded or downgraded the company, but the firm continues to face competitive pressures from new market entrants like Ibrite. The management team is addressing short-term tactical issues and has implemented cost-cutting measures to improve long-term profitability.
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