Alcon Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Last week, you might have seen that Alcon Inc. (VTX:ALC) released its quarterly result to the market. The early response was not positive, with shares down 4.0% to CHF60.28 in the past week. Alcon reported US$2.7b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.54 beat expectations, being 7.9% higher than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

Taking into account the latest results, the current consensus from Alcon's 21 analysts is for revenues of US$11.8b in 2027. This would reflect a modest 7.2% increase on its revenue over the past 12 months. Per-share earnings are expected to jump 107% to US$2.87. Before this earnings report, the analysts had been forecasting revenues of US$11.8b and earnings per share (EPS) of US$2.80 in 2027. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

View our latest analysis for Alcon

The consensus price target was unchanged at CHF74.55, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Alcon, with the most bullish analyst valuing it at CHF86.98 and the most bearish at CHF52.13 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of Alcon'shistorical trends, as the 5.7% annualised revenue growth to the end of 2027 is roughly in line with the 5.7% annual growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 7.3% annually. So although Alcon is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Alcon's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Alcon's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Alcon analysts - going out to 2028, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Alcon that you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.