Aging And Diabetes Trends Will Expand Ophthalmic Specialty Markets

Key Takeaways

• Untapped growth potential exists due to planned commercial expansion, scalable infrastructure, and industry consolidation supporting margin and revenue outperformance.
  
• Pipeline innovation and market dynamics in specialty eye care set the stage for new, high-margin recurring revenue streams not yet factored into forecasts.
  
• Heavy reliance on a few key products and high operating costs, combined with industry pricing, competition, and regulatory risks, threaten sustained revenue growth and profitability.

Catalysts

An eyecare pharmaceutical company, engages in the discovery, development, and commercialization of ophthalmic pharmaceutical products.

• While analyst consensus sees steady growth from VEVYE driven by strong refill rates and improved patient access, the company's supply-constrained, demand-driven under-investment in sales and marketing presents a much larger, untapped growth runway-once the planned scale-up and commercial team expansion occurs in 2026, VEVYE's national market share could accelerate rapidly and grow top-line revenue well beyond current forecasts.
  
• Analysts broadly agree that operating leverage will support future margin expansion, but this may be significantly understated as Harrow's paid-off, highly scalable infrastructure enables incremental sales from new biosimilars and product launches (like BYOOVIZ and BYQLOVI) to drop directly to EBITDA and net income with minimal cost base expansion, dramatically compounding earnings power.
  
• The U.S. is seeing sharply rising rates of diabetes and chronic eye disease across all age demographics, and Harrow's expanding portfolio positions it to capture not just market growth, but also a mix shift to higher value specialty formulations, supporting durable premium pricing, margin expansion, and outsized revenue gains as incidence increases.
  
• Harrow's publicly signaled but still undisclosed pipeline of non-pharmaceutical ophthalmic disease management solutions could open up high-margin, recurring revenue streams in diagnostics, digital health, or procedure support, introducing powerful new earnings drivers not reflected in current financial estimates.
  
• Increasing regulatory support for compounded drug outsourcing in the U.S., alongside exclusive GPO and specialty pharmacy partnerships, is creating competitive barriers for new entrants; this growing industry-wide consolidation should enable Harrow to further entrench its position, expand recurring sales through ambulatory surgical centers and physician offices, and secure both revenue and margin outperformance.

Harrow Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Harrow compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Harrow's revenue will grow by 45.0% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -4.5% today to 37.6% in 3 years time.
• The bullish analysts expect earnings to reach $260.9 million (and earnings per share of $5.44) by about August 2028, up from $-10.2 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 14.5x on those 2028 earnings, up from -139.5x today. This future PE is lower than the current PE for the US Pharmaceuticals industry at 19.7x.
• Analysts expect the number of shares outstanding to grow by 3.9% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

Harrow Future Earnings Per Share Growth

Risks

• Long-term industry pricing pressure, increased regulatory scrutiny, and payer cost containment could limit Harrow's ability to maintain or increase average selling prices, negatively impacting revenue growth and net margins over time.
  
• Heavy investment in commercial infrastructure and R&D combined with recent product acquisitions could strain operating costs, and if growth stalls or commercialization timelines slip, the company may experience declining net margins and lower earnings.
  
• Harrow's reliance on a limited number of products, notably VEVYE, IHEEZO, and TRIESENCE, exposes the business to concentration risk; any adverse regulatory, reimbursement, or reputation events could disproportionately impact revenue and overall earnings.
  
• The ophthalmic pharmaceutical sector faces increasing generic and biosimilar competition, especially as the acquired Samsung biosimilars approach commercialization; this could erode pricing power and accelerate margin compression, leading to pressure on both revenue and profitability.
  
• The rise of alternative non-pharmaceutical therapies (such as gene therapies or digital treatments) in ophthalmology may disrupt traditional drug-based disease management, threatening Harrow's long-term revenue growth and exacerbating competitive risks.

Valuation

• The assumed bullish price target for Harrow is $76.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Harrow'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 $76.0, and the most bearish reporting a price target of just $42.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $694.6 million, earnings will come to $260.9 million, and it would be trading on a PE ratio of 14.5x, assuming you use a discount rate of 6.8%.
  
• Given the current share price of $38.57, the bullish analyst price target of $76.0 is 49.2% 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.