Results: Alcon Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

It's been a good week for Alcon Inc. (VTX:ALC) shareholders, because the company has just released its latest annual results, and the shares gained 6.3% to CHF75.18. It looks like a credible result overall - although revenues of US$9.5b were what the analysts expected, Alcon surprised by delivering a (statutory) profit of US$1.96 per share, an impressive 35% above what was forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Alcon

Taking into account the latest results, the consensus forecast from Alcon's 22 analysts is for revenues of US$9.98b in 2024. This reflects a reasonable 5.6% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to decrease 2.6% to US$1.92 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$9.97b and earnings per share (EPS) of US$1.80 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of CHF80.26, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. The most optimistic Alcon analyst has a price target of CHF92.46 per share, while the most pessimistic values it at CHF59.22. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Alcon's past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Alcon'shistorical trends, as the 5.6% annualised revenue growth to the end of 2024 is roughly in line with the 6.3% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 7.8% per year. 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 2026, and you can see them free on our platform here.

You can also see whether Alcon is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.