Alcon, Inc. ALC delivered fourth-quarter 2024 core earnings per share (EPS) of 72 cents, up 2.9% from the year-ago quarter’s figure (up 3% at constant exchange rate or CER). The figure topped the Zacks Consensus Estimate by 2.9%.

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Alcon reports “core” results based on non-IFRS (International Financial Reporting Standards) measures. In the fourth quarter, the company’s EPS was 57 cents, down 33.7% (down 34% at CER) year over year.

The full-year core EPS was $3.05, up 11.3% year over year (up 16% at CER). The figure topped the Zacks Consensus Estimate by 0.7%.

Despite the positive figures, ALC's stock price remained relatively stable in after-hours trading following the earnings release. 

ALC’s Revenues in Detail

Net sales to third parties in the quarter under review were $2.48 billion, which surpassed the Zacks Consensus Estimate by 0.7%. The top line also increased 6.2% from the year-ago quarter’s level (up 6% at CER).

Full-year 2024 net sales to third parties totaled $9.84 billion, up 5% year over year. The figure surpassed the Zacks Consensus Estimate by 0.2%. 

ALC’s Q4 in Detail

Alcon reports operations through two segments — Surgical (comprising Implantables, Consumables and Equipment/Other) and Vision Care (comprising Contact Lenses and Ocular Health).

Surgical

Surgical sales amounted to $1.40 billion, up 5% year over year on a reported as well as CER basis. Our model projected the segment’s growth to be 6.1% at CER versus the prior year.

Within this, net sales in Implantables increased 2% at CER, led by strong sales of advanced technology intraocular lenses in international markets, partially offset by slower market conditions and competitive pressures in the United States. Our model projected 4.9% year-over-year growth at CER.

Consumables net sales increased 7% at CER, driven by vitreoretinal and cataract consumables and price increases. Our model projected a growth rate of 3.9% at CER.

Equipment/Other net sales were up 2% at CER from the prior-year quarter’s level. Our model forecasted a decline of 0.8% at CER.

Vision Care

The segment reported total sales of $1.10 billion, up 8% year over year on a reported basis and 7% at CER. Our model projected 8.5% growth at CER.

Net sales of Contact Lenses increased 11% year over year at CER, driven by product innovation, including toric multifocal modalities and price increases. This surpassed our model’s projected year-over-year growth of 9.4% at CER.

Ocular Health sales increased 2% year over year at CER, primarily driven by the portfolio of eye drops, including continued strength from the Systane family of artificial tears. However, this was partially offset by declines in contact lens care and an impact from the divestiture and out-licensing of rights to certain eye drops in China. Our model forecasted 6.3% growth at CER.

Margins

The cost of net sales in the fourth quarter was $1.09 billion, up 4.2% year over year. The core gross profit rose 7.9% to $1.38 billion. Meanwhile, the core gross margin expanded 86 basis points (bps) to 55.9%.

SG&A expenses increased 1% year over year, while R&D expenses rose 11.5%. The core operating margin expanded 208 bps in the fourth quarter to 14.1%.

Alcon Price, Consensus and EPS Surprise

Alcon price-consensus-eps-surprise-chart | Alcon Quote

ALC’s Financial Position

Alcon exited 2024 with cash and cash equivalents of $1.68 billion compared with $1.09 billion at the end of 2023. 

The cumulative net cash flow from operating activities at the end of the fourth quarter was $2.08 billion compared with $1.39 billion in the year-ago period. Free cash flow totaled $1.60 billion compared with $730 million in the comparable period of 2023.

ALC’s 2025 Outlook

Alcon provided its financial outlook for 2025.

The company now anticipates 2025 net sales to be in the range of $10.2-$10.4 billion, indicating year-over-year growth of 6-8% at CER. The Zacks Consensus Estimate for ALC’s revenues is pegged at $10.38 billion.

Core EPS for the full year is expected to be in the range of $3.15 to $3.25. This suggests growth of 8-11% at CER from the 2024 levels. The Zacks Consensus Estimate for 2025 earnings is currently pegged at $3.28 per share.

Our Take

Alcon posted better-than-expected fourth-quarter results, with both earnings and revenues beating estimates. The performance was driven by robust demand for the company’s innovative products, balanced geographic footprint and strong execution by the team. Growth in the Vision Care segment underscores the strength of contact lenses. The expansion of both margins in the quarter is encouraging as well.

Alcon is preparing for product launches that will drive its next phase of growth in 2025 and beyond.

Zacks Rank and Key Picks

Alcon currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the broader medical space are ResMed RMD, Cardinal Health CAH and Insulet PODD.

ResMed reported a second-quarter fiscal 2025 adjusted EPS of $2.43, which topped the Zacks Consensus Estimate by 5.6%. Revenues of $1.28 billion exceeded the Zacks Consensus Estimate by 1.6%. RMD carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

RMD has an estimated fiscal 2025 earnings growth rate of 21.9% compared with the industry’s 13.2%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.9%.

Cardinal Health, carrying a Zacks Rank #2 at present, posted a second-quarter fiscal 2025 adjusted EPS of $1.93, which outpaced the Zacks Consensus Estimate by 10.3%. Revenues of $55.26 billion exceeded the Zacks Consensus Estimate by 0.7%.

CAH has an estimated five-year earnings growth rate of 10.7% compared with the industry’s 9.3%. Its earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%.

Insulet, presently carrying a Zacks Rank #2, posted a fourth-quarter 2024 adjusted EPS of $1.15, which topped the Zacks Consensus Estimate by 9.5%. Revenues of $597.5 million exceeded the Zacks Consensus Estimate by 2.7%.

PODD has an estimated long-term earnings growth rate of 20.3% compared with the industry’s 15.5%. Its earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 27.5%.

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