Stifel maintains $20 target, Buy rating on STAAR Surgical stock

On Thursday, STAAR Surgical (NASDAQ: NASDAQ:STAA) received a reaffirmed Buy rating and a $20.00 price target from Stifel analysts. The endorsement followed STAAR Surgical’s first-quarter sales for 2025, which exceeded both the analyst’s and consensus expectations, primarily driven by a 9% year-over-year growth outside of China. Management’s decision to retract the previous 2025 guidance was attributed to uncertainties surrounding the economy and tariffs, but Stifel’s analysts believe the company’s leadership is still broadly confident in the withdrawn forecast. According to InvestingPro data, STAAR maintains a strong financial position with a current ratio of 5.23, indicating robust liquidity to meet short-term obligations.

STAAR Surgical’s year-to-date performance in China, the company’s largest market, has been promising, with first-quarter implantable Collamer lens ( ICL (TASE:ICL)) volumes remaining stable or increasing compared to the previous year. The company anticipates that its inventory in China will normalize by the end of the second quarter of 2025, which is expected to alleviate a significant short-term concern for investors. InvestingPro analysis shows the company’s overall financial health score is "GOOD" at 2.58, though 8 analysts have recently revised their earnings expectations downward for the upcoming period.

Furthermore, STAAR Surgical’s efforts to mitigate the impact of tariffs are projected to shield the company at least through the end of 2025. This has bolstered Stifel’s confidence in the company’s prospects for 2026. Stifel analysts project that STAAR Surgical could achieve $330 million in sales in 2026, which would represent a low single-digit to mid single-digit percentage growth year-over-year, based on a normalized sales base of $313 million to $323 million for 2025. This forecast takes into account $165 million in sales outside of China, $100 million in reported sales within China, and $75 million to $85 million from the reduction of Chinese inventory, offset by a $27.5 million third-quarter revenue recognition in China for 2025.

STAAR Surgical’s solid performance and strategic planning appear to be key factors in Stifel’s continued support of the stock, with the expectation of steady growth in the forthcoming year.

In other recent news, STAAR Surgical reported its first quarter 2025 earnings, revealing a wider-than-expected loss with earnings per share (EPS) at -$1.10, missing the forecast of -$0.58. However, the company’s revenue exceeded expectations, coming in at $42.6 million against a forecast of $40.33 million. The company faced a significant decline in China sales, which fell to $389,000 from $38.5 million the previous year, impacting overall performance. Despite this, STAAR Surgical experienced a 9% growth in sales outside of China, indicating resilience in other markets. The company withdrew its financial guidance due to macroeconomic uncertainties but aims for profitability in the second half of 2025.

Canaccord Genuity recently raised STAAR Surgical’s stock price target from $17.00 to $20.00, maintaining a Hold rating. The firm noted the company’s challenging first quarter but acknowledged its optimistic outlook, especially regarding a potential turnaround in China, the company’s largest market. STAAR Surgical’s management expects to meet the previously set guidance of $75 million to $125 million in revenue from China for the fiscal year 2025. The company is also implementing cost-cutting programs and accelerating its Swiss manufacturing operations to mitigate challenges.

STAAR Surgical plans to launch a new product, the EVO Plus (V5) lens, in China mid-2025, which could bolster its presence in the market. The company’s leadership has taken steps to manage inventory levels and address tariffs, aiming to stabilize operations in China. Analysts from Canaccord Genuity emphasize the need for execution amidst uncertainties in China and broader challenges in the elective procedures market.

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