ALC: Is This Eye Treatment Stock the Buy as It Strikes $770M Buyout?
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Earlier this week, Switzerland-based eye care company Alcon Inc. ( ALC ) announced its entry into a definitive agreement to acquire Aerie Pharmaceuticals, Incorporation. ( AERI ) for $770 million.

Through this acquisition, ALC will add commercial products like Rocklatan and Rhopressa. It will also put AR-15512, a phase 3 product candidate for dry eye disease, and a pipeline of several clinical and preclinical ophthalmic pharmaceutical product candidates.

ALC’s CEO David Endicott said, “Aerie is the natural fit with on-market and pipeline products and R& D capabilities that offer the infrastructure needed to expand our ophthalmic pharmaceutic presence. ”

However, ALC has declined 5. 8% over the particular past month and 20% year-to-date to close the last trading session at $69. 74. It is currently trading 21. 4% below its 52-week high associated with $88. 78, which it hit on December 29, 2021.

Here’s what could influence ALC’s performance in the upcoming months:

Mixed Financials

ALC’s net sales increased 5% year-over-year in order to $2. 2 billion with regard to the second quarter ended June 30, 2022. The company’s operating income declined 12. 6% year-over-year to $200 million. Its net earnings fell 1. 9% year-over-year to $148 million. In addition, its EPS dropped 3. 2% year-over-year to $0. 30.

Favorable Analyst Estimates

ALC’s EPS regarding fiscal 2022 and 2023 is expected to increase 6. 9% plus 14. 8% year-over-year in order to $2. thirty and $2. 64, reviewed. Its revenue for fiscal 2022 and 2023 is expected to increase 5. 6% plus 5. 4% year-over-year in order to $8. 76 billion and $9. 24 billion, respectively. It surpassed consensus EPS estimates in each of the trailing four quarters.

Mixed Valuation

In terms of forward P/B , ALC’s one. 76x will be 36. 7% lower than the 2. 78x industry average. Likewise, the 3. 90x forward P/S is 22. 4% less than the five. 03x industry average.

However , the stock’s 4. 28x forward EV/S is 0. 2% higher than the 4. 28x business average. Also, its 16. 77x forward EV/EBITDA is usually 20. 5% higher than the 13. 91x market average.

POWR Ratings Reflect Uncertainty

ALC has an overall rating of C, equating to a Neutral in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. ALC has a C grade intended for Value, within sync with its mixed valuation.

It offers a B grade to get Stability, consistent with its 0. 66 beta.

ALC is definitely ranked #57 out of 145 stocks within the Medical – Devices & Equipment industry. Click here to access ALC’s ratings for Growth, Momentum, Sentiment, and Stability.

Bottom Line

The acquisition of AERI will help ALC expand into the ophthalmic pharmaceutical space. Nevertheless , the particular stock can be trading beneath its 50-day and 200-day moving averages of $71. 38 plus $76. 09, indicating a downtrend. Moreover, given its mixed financials and value, it could be wise to wait for a better entry point in the stock.

How Does Alcon Inc. (ALC) Stack Up Against the Peers?

While ALC provides an overall POWR Rating of Chemical, you might want to consider investing in the following Medical – Devices & Equipment stocks with a good A (Strong Buy) or B (Buy) rating: FONAR Corporation ( FONR ), Abbott Laboratories ( ABT ), and InfuSystem Holdings, Inc. ( INFU ).

ALC shares were trading at $68. 70 per share upon Friday morning, down $1. 04 (-1. 49%). Year-to-date, ALC has declined -21. 14%, versus a -12. 04% rise in the particular benchmark S& P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the particular stock market. This particular led to him obtaining a master’s degree in Finance plus Accounting. Currently, as an investment analyst and financial journalist, Dipanjan offers a strong interest inside reading plus analyzing emerging trends in financial markets. More…

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