Redburn raises Alcon stock rating to Buy

On Sunday, Redburn-Atlantic upgraded Alcon Inc. (NYSE:ALC:SW) (NYSE: ALC), a $41.5 billion market cap healthcare equipment company, from Neutral to Buy and increased the price target to CHF93.00 from CHF80.00. With the stock currently trading at $83.41, the firm anticipates that Alcon's sustained investment in research and development will yield significant results in the coming year, marked by a sequence of product launches.

According to Redburn-Atlantic, Alcon is well-positioned to capitalize on its leading market positions and extensive operational reach. These advantages are expected to drive organic growth beyond its current 5.25% revenue growth rate and further enhance the company's impressive 55.5% gross margin profile.

The analyst noted that concerns regarding margin expansion in 2025 are being addressed by management's effective cost control measures, which should counterbalance the investments associated with new product launches. InvestingPro analysis shows the company maintains strong financial health with a "GREAT" overall score, supported by liquid assets exceeding short-term obligations.

The analyst highlighted that the recent underperformance of Alcon's share price represents a buying opportunity for investors. The upgrade to a Buy rating is supported by the belief that Alcon's strategic focus and upcoming product introductions will significantly contribute to its financial performance.

Alcon's comprehensive approach to growth, which includes a balance of cost management and innovation, is likely to be a key factor in achieving the improved financial outcomes forecasted by Redburn-Atlantic. The new price target of CHF93.00 reflects this positive outlook for the company's future.

In other recent news, Alcon Inc., the leader in eye care products, has shown strong financial growth in the third quarter of 2024. The company's sales surged by 6% year-over-year, reaching $2.4 billion, while core diluted earnings per share (EPS) escalated by 25% to $0.81. Alcon's core operating margin also saw an improvement, standing at 20.6%. During the first nine months of 2024, Alcon generated a record $1.3 billion in free cash flow and updated its full-year revenue guidance to $9.8 billion to $9.9 billion, reflecting a 6% to 7% constant currency sales growth rate.

Investment firm Needham has upgraded the price target for Alcon from $103.00 to $108.00, maintaining a Buy rating on the company's stock and selecting Alcon as its top pick for 2025. Needham's positive outlook is based on Alcon's upcoming product launches, which are expected to accelerate revenue growth throughout 2025. On the other hand, KeyBanc reiterated an Overweight rating and a $107.00 price target on Alcon's stock, expressing confidence in the company's ability to meet its 2027 financial goals.

In addition, Alcon has entered into a strategic partnership with OcuMension Therapeutics in China and is planning significant capital expenditures for annual maintenance.

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