BofA upgrades Alcon to "buy," citing earnings growth and product launches

Investing.com -- Alcon (SIX:ALCC) has received an upgrade to a "buy" rating from BofA Securities in a note dated Tuesday, signaling the beginning of an earnings growth cycle for the Swiss eye care company. 

The shift in outlook follows a recalibration of investor expectations, with management adjusting near-term forecasts to more realistic levels. 

This reset, combined with a strong projected performance exiting 2025, sets the stage for accelerated earnings momentum into 2026.

"We believe Alcon is on the cusp of an earnings upgrade cycle driven by product launches," analysts at BofA Securities said. 

The report argues that earnings momentum should gain pace over 2025, culminating in a "promising exit rate for FY26." 

BofA Securities raised its price objective for Alcon shares to CHF 96 ($108), up from CHF 82, indicating a potential upside of approximately 17%.

The upgrade is supported by multiple growth drivers, particularly in Equipment and Consumables, where Alcon is expected to benefit from the UNITY VCS/CS upgrade cycle. 

"Alcon’s main revenue growth driver over the coming years sits within Equipment and Consumables, tied to the new UNITY VCS/CS upgrades," the analysts noted. 

A major portion of the company’s installed base of Centurion and Constellation surgical devices is due for an upgrade, contributing 15-30% to Equipment revenue and providing a 1-2% lift to Consumables growth annually through 2030. 

Additionally, the launch of Precision7, a reusable one-week contact lens, could position Alcon competitively within the biweekly segment, with potential sales exceeding $300 million by 2030. 

"A 20% price premium and modest share gains vs. biweekly would generate >$300m sales for Precision7 by 2030," analysts projected.

Concerns about increasing competition in the intraocular lens (IOL) market were also addressed. 

While Alcon faces pricing and market share pressures, analysts argue that "even if Alcon loses -1% share every year on average, an AT-IOL penetration increase of +100bps per year (in line with history) would allow for a +6% sales CAGR for Implantables over 2025-27E." This gradual shift in market dynamics should mitigate potential downside risks.

BofA Securities also pointed to Alcon’s valuation as a supporting factor in the rating upgrade. "Valuation doesn’t look too demanding, with the shares trading below their long-term average," the analysts flagged. 

With the stock trading at a discount compared to historical multiples and industry peers, the risk-reward profile appears increasingly favorable.

Earnings projections reinforce the case for Alcon’s continued growth. Adjusted EPS is expected to rise from $3.28 in 2025 to $3.92 in 2026 and $4.46 in 2027, reflecting steady financial expansion. 

The company’s ability to execute on its product launches and navigate competitive pressures will be critical in determining whether it can sustain this momentum.