Alcon Marked as Top Pick for 2025 by Needham & Company

Investing.com — Needham & Company has identified Alcon (NYSE: ALC) as its top pick for 2025, adding the medtech stock to its Conviction List and raising the price target from $103 to $108.

On Tuesday, Alcon's US-listed shares rose by over 1%.

These changes reflect a positive outlook for Alcon's anticipated product launches, expected to boost revenue growth, strengthen margins, and enhance earnings by 2026.

Alcon is set to launch eight new products in 2025, with the PanOptix Pro, expected in the first half of the year, probably making the biggest impact. Needham estimates that this product could increase revenue growth by 30 basis points, improve operating margins by 20 basis points, and add $0.04 to earnings per share.

The first product launch of the year, Precision 7 in January, is projected to boost 2025 revenue growth by 90 basis points, contributing an additional $0.03 to earnings per share.

Despite low initial expectations for the US launch of Unity VCS, survey data indicates strong potential demand, which may enhance revenue growth by 150 basis points and add another $0.03 to earnings per share.

“Crucially, the Unity platform launch will drive margin-accretive consumables, potentially offsetting the equipment’s margin pressure,” noted Needham analysts led by David Saxon.

Needham’s analysis suggests robust performance in Alcon’s end markets, particularly in cataracts and contact lenses, for 2025. A survey of US doctors shows strong volumes for intraocular lenses (IOL), and the PanOptix Pro launch should help regain market share from competitors like Johnson & Johnson's Odyssey.

In contact lenses, analysts anticipate that wearer volumes and trade-ups will remain strong.

Valuation-wise, Needham considers the stock attractive, trading at a next-12-month price-to-earnings (P/E) ratio of 25.7x, which is a 14% discount to its five-year historical average of 30.0x.

“We anticipate product launches will lead to revenue growth accelerating throughout 2025, driving multiple expansion as Alcon's 2026 margin and earnings outlook strengthens,” the analysts concluded.