Aging Population And Evolving Eye Care Will Expand Treatment Access

Key Takeaways

• Accelerating adoption of innovative, minimally invasive eye therapies positions Glaukos for outsized revenue growth and expanding market share as treatment paradigms shift.
  
• Diversifying its pipeline across multiple ophthalmic conditions enables sustainable, long-term earnings growth beyond current core markets.
  
• Dependence on a limited product portfolio and upcoming product launches, combined with regulatory and reimbursement challenges, increases vulnerability to revenue and margin pressures.

Catalysts

An ophthalmic pharmaceutical and medical technology company, develops therapies for the treatment of glaucoma, corneal disorders, and retinal diseases in the United States and internationally.

• While the analyst consensus expects gradual iDose TR uptake as reimbursement solidifies, current surging adoption rates in MAC regions with established professional fees suggest the addressable market is significantly understated, with the possibility for far faster nationwide physician training and utilization once all MACs align-pointing to outsized revenue acceleration sooner than expected.
  
• Analyst consensus anticipates Epioxa to drive future corneal health growth, but by offering the first-ever FDA-approved, surgery-free and epithelium-sparing cross-linking therapy, Epioxa could create a step-change in procedure volumes, capturing not only nearly all existing Photrexa patients but also unlocking an entirely new patient segment previously unwilling to undergo invasive treatment-supporting high double-digit annual revenue gains in the corneal franchise post-launch.
  
• Glaukos is poised to disproportionately benefit from a dramatic global rise in glaucoma and keratoconus diagnoses driven by the aging population and increased healthcare screening, meaning sustained high-teens or greater long-term top-line growth is realistic as millions of new patients enter the treatment pool in both established and emerging markets.
  
• The accelerating migration toward minimally invasive, in-office ophthalmic procedures aligns perfectly with Glaukos' development of office-based solutions like iDose Trio, giving the company a unique ability to capture high-margin, recurrent revenues from forever patients as treatment paradigms shift away from hospitals-forecasting both market share expansion and significant margin uplift over time.
  
• Glaukos' rapidly diversifying pipeline-including late-stage programs in Demodex blepharitis, combination therapies and retinal disease-creates multiple large new TAMs ahead of explicit Street models, positioning Glaukos for durable multi-year earnings compounding as these platforms generate layered, non-cyclical incremental growth on top of the current glaucoma and corneal businesses.

Glaukos Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Glaukos compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Glaukos's revenue will grow by 27.9% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -21.4% today to 10.3% in 3 years time.
• The bullish analysts expect earnings to reach $93.5 million (and earnings per share of $3.0) by about August 2028, up from $-92.8 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 138.7x on those 2028 earnings, up from -53.2x today. This future PE is greater than the current PE for the US Medical Equipment industry at 28.3x.
• Analysts expect the number of shares outstanding to grow by 4.24% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.06%, as per the Simply Wall St company report.

Glaukos Future Earnings Per Share Growth

Risks

• Glaukos faces ongoing reimbursement pressure and healthcare cost containment, as evidenced by CMS's proposed reductions in physician fee reimbursement for key ophthalmic procedures and continued headwinds from implementation of MAC LCDs, potentially compressing future net margins and limiting revenue growth from core products.
  
• The company's heavy reliance on iDose TR and its narrow product portfolio for growth exposes it to pipeline dependency risk, making long-term revenues vulnerable if new competitive products gain traction, regulatory guidance evolves, or patient populations prove less suitable for interventional procedures due to demographic shifts with higher comorbidities.
  
• Heightened competitive headwinds are emerging in major international markets, with the trialing and introduction of new competitive MIGS products threatening Glaukos' ability to sustain growth rates abroad, increasing the risk of market share erosion and revenue deceleration.
  
• High research and development expenditures are necessary to support Glaukos' broad pipeline, and there is execution risk if new therapies such as Epioxa, PRESERFLO MicroShunt, or iDose Trio experience regulatory delays, reimbursement challenges, or slow market adoption, which could outpace revenue growth and pressure cash flow and operating margins over time.
  
• The anticipated disruptive transition from Photrexa to Epioxa in the Corneal Health franchise may lead to a material short-term headwind as patients defer procedures in anticipation of the new therapy, which could result in reduced revenues and increased uncertainty for this business segment during the product launch and ramp-up period.

Valuation

• The assumed bullish price target for Glaukos is $165.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Glaukos's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $165.0, and the most bearish reporting a price target of just $72.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $906.3 million, earnings will come to $93.5 million, and it would be trading on a PE ratio of 138.7x, assuming you use a discount rate of 7.1%.
  
• Given the current share price of $86.16, the bullish analyst price target of $165.0 is 47.8% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.