Alcon Earnings: Raising Fair Value Estimate 5% on a More Positive Outlook; Shares Still Overvalued

Narrow-moat Alcon started the year strong and posted first-quarter results that were better than expected. Total sales were up 7.4% year over year driven by robust demand, strong market conditions, and pricing improvements, somewhat offset by an unfavorable foreign exchange. After slightly raising our near-term forecast given an updated management’s guidance as well as baking in a more favorable long-term outlook given positive commentary from the Capital Markets Day that took place during the quarter, we are raising our fair value estimate to $60 per share from $57. Despite the raised valuation, however, we still see shares that are trading roughly 30% above our estimate as overvalued.