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Alcon shares target raised by Baird on growth prospects

EditorEmilio Ghigini
Published 05/15/2024, 06:46 AM

On Wednesday, Baird, a financial services firm, increased its price target for Alcon Inc. (NYSE: NYSE:ALC) shares to $104, up from the previous $95. The firm has also reiterated its Outperform rating on the stock.

The adjustment follows Alcon's robust performance in the first quarter of 2024, which highlighted the company's dominance in various fast-growing markets.

Alcon's recent financial results have demonstrated significant growth, particularly in the contact lens segment, which is expected to continue driving the company's revenue and margins throughout 2024.

Baird anticipates that Alcon's surgical products will contribute to the company's growth in 2025. This outlook supports Baird's positive stance on Alcon's prospects over multiple years.

Despite a 9% increase in Alcon's share price on Wednesday, when the S&P 500 index remained unchanged, Baird believes there is still potential for further appreciation.

Alcon's shares are currently trading at approximately 17 times next twelve months' (NTM) EBITDA, which is lower compared to its peers in the high-quality, fast-growing, large-cap medical technology sector, such as Stryker (NYSE:SYK), Boston Scientific (NYSE:BSX), and Edwards Lifesciences (NYSE:EW), which trade between 21 and 23 times NTM EBITDA.

The financial firm's analysis indicates that Alcon's market position and growth trajectory make it a top pick within their coverage universe.

The revised price target reflects confidence in Alcon's continued market leadership and its ability to capitalize on opportunities within the medical technology industry.

InvestingPro Insights

Following Baird's update on Alcon Inc. (NYSE: ALC), InvestingPro data further enriches the outlook on the company. Alcon's market capitalization stands at a robust $43.66 billion, reflecting its significant presence in the industry. With a P/E ratio of 38.82 and a slight increase to 41.78 over the last twelve months as of Q1 2024, the company's valuation is on the higher side, which aligns with Baird's optimistic view. However, the PEG ratio of 0.2 for the same period suggests that Alcon's earnings growth could be undervalued relative to its peers, potentially offering an attractive entry point for investors.

InvestingPro Tips provide additional insights. Alcon has demonstrated a strong return over the last week with an 11.35% price total return, and it continues to trade near its 52-week high, at 99.94% of the peak price. This momentum is backed by a solid dividend growth of 15.33% over the last twelve months, highlighting the company's commitment to shareholder returns. Importantly, Alcon is a prominent player in the Healthcare Equipment & Supplies industry, which is crucial for investors looking for stability and growth within the healthcare sector.

For readers seeking a deeper analysis, InvestingPro offers an additional 15 tips on Alcon, which could guide investment decisions. To access these insights and more, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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