On Wednesday, Wells Fargo increased its price target on Alcon Inc. (NYSE: NYSE:ALC) shares, moving the goal from $89.00 to $94.00 and continuing to recommend an Overweight rating for the stock. This adjustment comes after Alcon reported a stronger-than-expected gross margin (GM) and operating margin (OM) for the first quarter.
Alcon's first-quarter net product sales core gross margin stood at 63.4%, surpassing the Wells Fargo estimate of 62.4%. Similarly, the company's core operating margin for the same period was 22.0%, exceeding the predicted 19.9% and showing a year-over-year increase of 140 basis points.
Despite the encouraging first-quarter performance, Alcon has decided to keep its operating margin guidance unchanged for 2024. The forecast suggests a potential decrease in margins from the second to the fourth quarter, which the company attributes to the timing of expenditures, seasonal trends, and the impact of foreign exchange rates. Management emphasized that they expect margin expansion to be more significant in the second half of the year.
For the year 2024, Alcon anticipates that the gross margin will align with the previous year's performance. However, they also forecast a headwind of approximately 50 basis points to the first half gross margin due to the higher cost inventory affecting the profit and loss statement.
InvestingPro Insights
Following Wells Fargo's upgraded stock price target on Alcon Inc. (NYSE: ALC), current data and insights from InvestingPro may provide additional context for investors. Alcon's recent performance shows a significant return over the last week, with a 1 Week Price Total Return of 11.35%, and a strong return over the last three months, at 14.88%. This aligns with the positive momentum reflected in the company's first-quarter results.
InvestingPro Tips highlight Alcon's consistent dividend growth, with a recent increase marking its fourth consecutive year of dividend raises. This could be an attractive point for income-focused investors, considering the company's Dividend Growth in the last twelve months as of Q1 2024 stood at 15.33%.
Moreover, Alcon's PEG Ratio, which measures the stock's price relative to its earnings growth, is currently at a low 0.2, suggesting that the stock may be undervalued based on near-term earnings growth expectations. Investors considering Alcon may also note that the company is trading near its 52-week high, at 99.94% of this level, and the InvestingPro Fair Value estimate is $83.3 USD, offering a perspective on the stock's valuation.
For more detailed analysis and additional InvestingPro Tips, visit https://www.investing.com/pro/ALC. To access these insights, use coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 15 more InvestingPro Tips available for Alcon, providing a comprehensive outlook on the company's financial health and market position.
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