BofA Downgrades Alcon to Underperform on Weaker Outlook

Core Viewpoint - BofA Securities has downgraded Alcon Inc. from Buy to Underperform and reduced its price target from $100 to $75 due to a negative outlook influenced by market softness, increased competition, and multiple guidance cuts affecting sentiment [1] Group 1: Market Conditions - The downgrade reflects a year characterized by market softness and heightened competition, which have negatively impacted Alcon's performance [1] - Analysts believe that consensus forecasts for improving confidence into 2026 are overly optimistic, expecting a sharp rebound and market share gains despite limited visibility [2] Group 2: Financial Estimates - BofA's fiscal 2026 and 2027 EPS estimates are 4% and 7% below consensus, indicating a cautious outlook [2] - The firm has cut its fiscal 2026 EPS by 8% and adjusted valuation multiples based on higher WACC assumptions and adverse market conditions [3] Group 3: Valuation Metrics - Despite a 20% valuation pullback from 2024 highs, Alcon's forward P/E ratio remains around 25x, which is considered elevated given the expected EPS CAGR of less than 10% from 2025 to 2027 [3]