Alcon, Inc

Published: 25 May 2023 15:03 CET

Analyst:

Stephan Analyst
Analyst
stephan.joehri2@adviscent.com
07633115

Rating:Hold View rating history	Country:Switzerland	Sector:Health Care	Subsector:Health Care Supplies
Rating:Hold View rating history	ISIN:CH0432492467	Risk assessment:-	Sustainability Rating:★★★☆☆

Investment Case

In terms of market capitalisation, Alcon is by far the most important of the listed Swiss medtech companies. The world market leader in eye surgery and contact lenses weighs about twice as much as Straumann or Sonova. The former Novartis subsidiary has its tax domicile in Fribourg (FR) and its headquarters in Vernier (GE). However, the operational headquarters are located in the USA. Only about 700 of the total of about 24,000 employees work in Switzerland.

For the investor, this means that with Alcon he is participating in an American-managed group. In April 2019, the company was made independent via a spin-off. However, the entrepreneurial leeway gained in this way could not (yet) be converted into better results for various reasons. Novartis has given its subsidiary a lot of debt capital and goodwill ($9 billion). To date, they have not been reduced.

In the middle of the year, debts amounted to $4 billion, with a net balance of $2.9 billion on the books. The recent purchase of Aerie Pharmaceuticals for $770 million even delays the debt reduction. Only because Alcon's business model generates a lot of cash flow is the debt burden sustainable. But the more interest rates rise, the more the debt service weighs on the result.

In the initial phase as a stand-alone company, the costs of separating from the parent company and the necessary restructuring affected profitability. Apparently not all homework had been done. Because of the rather sobering results, Alcon's shares have only performed in line with the overall market since the IPO.

But now the teething troubles seem to be over. By 2025, the company aims to reach sales of $10 billion and a so-called core operating profit margin of 25% (second quarter 2022: 18.4%). This does not include amortisation, impairments, transformation costs and other "unpleasant" charges. For 2022 as a whole, management promises to achieve a core EBIT margin of 18-19%; next year it should be over 23%.

Conclusion: Alcon's management has yet to prove that the greater entrepreneurial freedom also generates added value. Wait and see.

Facts & Figures

General Information

ISIN	CH0432492467
Bloomberg Ticker	ALC SW
Price ( CHF )	-
Market Cap ( CHF m )	32,483
Free Float ( % )	0
Net debt	2,912.00
Gearing	15.47
ROE	0.97
Next reporting date	09.11.2021

Valuation

	2024	2025	2026
P/E ( CHF m )	-	-	-
EV/EBITDA ( CHF m )	-	-	-
P/B ( CHF m )	-	-	-
Dividend Yield ( CHF m )	-	-	-

Financial Data

	2024	2025	2026
Revenue ( CHF m )	-	-	-
EBITDA ( CHF m )	-	-	-
Net Profit ( CHF m )	-	-	-
EPS ( CHF )	-	-	-
Dividend ( CHF m )	-	-	-

Performance

Peer Group Comparison

Company name	Market Cap (CHF m)	P/E (CHF m)	EV/EBITDA (Next 12 month) (CHF m)	P/B (CHF m)	Dividend Yield (CHF m)	EPS CAGR (3 years)	EBITDA margin	ROIC	Net debt/EBITDA
Alcon, Inc	32,483	-	-	-	-	-	20.08	1.27	1.97

Company details

Company Portrait

Alcon Inc., an eye care company, researches, develops, manufactures, distributes, and sells eye care products for eye care professionals and their patients worldwide. The company's Surgical segment offers equipment, instrumentation and diagnostics, intraocular lenses (IOLs), and other implantables; and consumables, including viscoelastics, surgical solutions, incisional instruments, surgical custom packs, and other products for use in surgical procedures. Its cataract products include centurion vision system, LenSx femtosecond laser, LuxOR surgical ophthalmic microscope, NGENUITY 3D visualization system, and ORA system for intra-operative measurements; custom pak surgical procedure packs; vitreoretinal products comprising constellation vision systems, procedure packs, lasers and hand-held microsurgical instruments, and grieshaber and MIVS instruments, as well as scissors, forceps and micro-instruments, medical grade vitreous tamponades, and Hypervit vitrectomy probes; refractive surgery products, including WaveLight lasers and Contoura Vision used for LASIK treatment; EX-PRESS glaucoma filtration device; and implantables products, including AcrySof IQ IOLs products include monofocal IOLs and advanced technology IOLs under the PanOptix and ReSTOR brands for the correction of presbyopia and astigmatism at the time of cataract surgery. Its Vision Care segment provides daily disposable, reusable, and color-enhancing contact lenses; ocular health products, such as dry eye, glaucoma, contact lens care, and ocular allergies; and ocular vitamins and redness relievers under the TOTAL, PRECISION, DAILIES AquaComfort PLUS, Air Optix, Opti-Free, Clear Care, Tears Naturale, Genteal, ICAPS, and Vitalux brands. The company was formerly known as Alcon Universal S.A. and changed the name to Alcon Inc. in December 2001. Alcon Inc. was founded in 1945 and is headquartered in Geneva, Switzerland.

Latest Company News

Alcon to Acquire EYSUVIS Adding to Its Ophthalmic Eye Drop Portfolio

GENEVA, May 23, 2022--(BUSINESS WIRE)--Alcon (SIX/NYSE: ALC), the global leader in eye care dedicated to helping people see brilliantly, today announced it has signed an agreement to acquire EYSUVIS^® (loteprednol etabonate suspension) 0.25% pharmaceutical eye drops from Kala Pharmaceuticals, Inc.

The acquisition will complement Alcon’s existing portfolio in the large and fast-growing dry eye category. EYSUVIS will complement the Systane^® family of eye drops which includes the recently launched Systane Preservative-Free formulations now available in a convenient, multi-dose bottle. While the Systane family is used for ongoing management of dry eye symptoms, EYSUVIS will provide Eye Care Professionals (ECPs) with an option for short-term treatment to mitigate dry eye disease.

Over 30 million people in the United States suffer from dry eye.¹ Alcon research shows that about 20-25% of dry eye patients experience acute episodes of dry eye on average twice per year.² EYSUVIS, a corticosteroid, may be prescribed by ECPs during these episodes of acute dry eye.

EYSUVIS was approved by the U.S. Food & Drug Administration in January 2021 as the first-and-only corticosteroid indicated for up to two weeks of treatment of the signs and symptoms of dry eye disease. The prescription therapy utilizes a proprietary drug delivery technology known as AMPPLIFY^® to enhance penetration of loteprednol etabonate into targeted tissue on the ocular surface, helping to prevent flares associated with dry eye disease.

Important legal Information

Rating history

11.12.2021

Hold

* Positive performance in the past is no guarantee of positive performance in the future. The risk of price and foreign currency losses and of fluctuations in return as a result of unfavorable exchange rate movements cannot be ruled out.

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