Buy the Dip in Alcon now (ALC)

Alcon AG is doubling down on innovation to expand its foothold in eye care. The company – the world’s largest maker of ophthalmic surgical devices and vision care products – has rolled out a series of new products aimed at boosting growth. In July, Alcon launched Tryptyr, a first-of-its-kind dry eye treatment that uses neuromodulator eye drops to stimulate natural tear production. This therapy targets an estimated $2.5 billion unmet market need in dry eye disease, a condition increasingly common as populations age and spend more time on screens. On the surgical side, Alcon recently introduced its Unity VCS system, a next-generation platform that combines cataract and vitreoretinal surgical capabilities in one machine. By integrating anterior and posterior eye surgeries into a single device, Unity VCS promises to make operating rooms more efficient for ophthalmologists and reinforce Alcon’s reputation for cutting-edge surgical tech.

The company isn’t relying on internal R&D alone – it’s also expanding through strategic deals. Earlier this month, Alcon agreed to acquire STAAR Surgical for about $1.5 billion, adding STAAR’s EVO line of implantable collamer lenses to Alcon’s portfolio. Implantable lenses are used in refractive surgery to correct high myopia (severe nearsightedness), a fast-growing market segment as global myopia rates are projected to reach 50% of the population by 2050. Alcon had previously lacked a presence in this niche, and STAAR is a market leader in it. Bringing STAAR’s lens implants under the Alcon umbrella broadens the company’s solutions for vision correction and complements its existing laser eye surgery offerings. Alcon’s leadership says the merger, expected to close next year, should be accretive to earnings by year two and accelerate growth in markets like Asia where many patients are unsuitable for LASIK. In addition, Alcon is pushing into new frontiers of eye care such as glaucoma and retinal disease. It recently bought a novel laser treatment for glaucoma (the Voyager device) and acquired a light therapy platform for dry age-related macular degeneration. These moves underscore a clear strategy: innovate and invest to fill gaps in the eye-care market. With a robust pipeline of products and acquisitions coming together, Alcon is positioning itself to deepen its already strong grip on a structurally growing industry.

Demographic Tailwinds in a Visionary Market

If Alcon’s lab and deal-making activity are the engine, powerful demographic trends are the tailwind filling its sails. The world’s population is not only growing but aging rapidly – and older people require much more eye care. Cataracts, for example, are an almost inevitable consequence of aging: by age 75, roughly half of Americans have experienced cataracts. Globally, cataracts remain the leading cause of blindness, and the only remedy is surgery to replace the eye’s cloudy lens with an artificial one. It’s no surprise, then, that cataract removal is one of the most common surgeries worldwide. Alcon, as a top supplier of the equipment, intraocular lenses and surgical supplies for these procedures, stands to benefit enormously from the “gray wave” of aging baby boomers. Its ophthalmic surgical segment, which generates about 56% of revenue, is already seeing steady demand thanks to aging demographics. And demand isn’t confined to the elderly: younger patients are driving growth in vision correction, too. Rising screen time and urban lifestyles have fueled an epidemic of myopia across the globe – by mid-century, half of the world’s people may be nearsighted. That means more people will need vision aids, whether glasses, contact lenses or refractive surgery. Alcon’s vision care division (44% of revenue) has been tapping into this trend, with products like its daily contact lenses and ocular health drops enjoying mid-single-digit sales growth. The addition of STAAR’s implantable lenses gives Alcon another way to serve a generation of patients seeking to shed their glasses.

Crucially, many of these eye care needs are non-discretionary and rising in prevalence, lending a degree of resilience to the ophthalmic market. An octogenarian with cataracts or a professional with chronically dry eyes is likely to seek treatment regardless of economic cycles. This helps explain why Alcon’s management remains upbeat about the future. “We’re entering an exciting phase at Alcon,” CEO David Endicott told investors on the latest earnings call, noting that the company has “never been better positioned for sustained growth.” His confidence is grounded in what he calls the enduring “megatrends” driving the business: an aging global population and increasing demand for better vision. Those structural tailwinds – along with technological advances making new treatments possible – suggest that the eye-care sector’s growth story has years, if not decades, left to run. As a pure-play eye-care leader, Alcon is arguably a prime beneficiary of these trends, provided it continues to execute and innovate.

Steady Outlook and Attractive Value

Recent market jitters have given Alcon a valuation that looks increasingly appealing for long-term investors. Earlier this week, the Geneva-based firm reported mixed second-quarter results: earnings per share of $0.76 beat expectations, but revenue of $2.58 billion came in a bit shy of forecasts. That modest top-line miss – attributed in part to softer U.S. surgical demand and even some U.S. trade tariffs on Swiss-made products – spooked the market and knocked Alcon’s stock down about 9% in a day. The shares recently traded around $80, hovering near a 52-week low and roughly 20% off their highs. In other words, investors have priced in plenty of bad news. Yet the company’s underlying performance and guidance paint a far more positive picture. Sales still grew about 3% year-over-year in Q2, powered by a 7% jump in contact lens revenue and gains in key product launches. Alcon reaffirmed its full-year earnings outlook and expects growth to accelerate in the back half of 2025 as new products ramp up. Management is taking steps to mitigate headwinds – for instance, relocating some manufacturing out of Switzerland to avoid hefty U.S. import tariffs – and is holding the line on its profitability goals.

“The markets… the megatrends haven’t changed” (CFO Tim Stonesifer during the Q2 2025 Earnings Call)

Conclusion

The current dip gives investors an opportunity to buy into that growth story at a discount. For those willing to look past the near-term blur of market volatility, Alcon’s long-term vision of rising demand and constant innovation comes clearly into focus – and it’s one that could reward patient shareholders in the years ahead.

Alcon is our stock of the month for August 2025.