Here's Why You Should Retain Glaukos (GKOS) Stock for Now

Glaukos Corporation GKOS is well-poised for growth on the back of favorable clinical trial results and a robust product pipeline. However, stiff competition is a concern.

Shares of this Zacks Rank #3 (Hold) company have risen 23.6% year to date compared with the industry’s 5% growth. The S&P 500 Index has also increased 7.7% in the same time frame.

Glaukos, with a market capitalization of $4.86 billion, is a leading ophthalmic medical technology and pharmaceutical company. It projects earnings growth of 4% for 2024 and expects to maintain its strong performance in terms of revenues as well.

The company has an average four-quarter earnings surprise of 1.25%.

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Key Catalysts

In 2023, Glaukos witnessed sales returning to growth after experiencing a downturn in 2022. This positive shift can be attributed to a more favorable macroeconomic climate and the introduction of a series of new products in recent quarters. The company anticipates sustained robust demand for its international Glaucoma and Corneal Health product lines to support its top-line growth in 2024.

The commercial launch of the iStent infinite in 2023 has provided a significant lift to the U.S. glaucoma franchise, positioning it as a key growth catalyst in the forthcoming quarters. The company's optimistic revenue projections for 2024, announced during its fourth-quarterearnings call indicate a positive trajectory.

Meanwhile, the new local coverage determinations proposed in June 2023 are likely to remove certain ophthalmic goniotomy and canaloplasty procedures from coverage. This is also expected to have a positive impact on the iStent business in 2024.

Over recent quarters, GKOS has launched a suite of products, including iPrime, iAccess and iStent, which have been instrumental in boosting the company's revenues. In December, Glaukos achieved a milestone by securing FDA approval for its latest product, iDose TR, to lower intraocular pressure in individuals with ocular hypertension or open-angle glaucoma.

These innovations are expected to continue to bolster Glaukos' growth trajectory into 2024. Earlier this month, the company received permanent Healthcare Common Procedure Coding System J-code from the U.S. Centers for Medicare and Medicaid Services, which should drive patient access in the United States. This is because it will likely accelerate the billing and physician reimbursement procedures.

In February, Glaukos announced fourth-quarter 2023 results. The company’s net sales were $82 million, up 16% year over year. Revenues for 2024 are estimated to be in the range of $350-$360 million, implying a year-over-year improvement of 11.2-14.4%.

What’s Hurting GKOS?

Although Glaukos has a promising pipeline, it has faced setbacks in terms of clinical development or regulatory activities. Any potential clinical or regulatory setbacks can lead to an adverse impact on the company’s share price, thereby hurting investors’ wealth. The FDA denied approval to a pre-market approval application for the ab-externo device for glaucoma, MicroShunt. The company is currently evaluating alternate regulatory pathways for approval, and commercial launch in the United States remains uncertain.

Moreover, Glaukos currently relies on a limited number of third-party suppliers, in some cases sole suppliers, to supply components for the iStent, the iStent inject models and other pipeline products. If one or more of these suppliers cease to provide the company with sufficient quantities of components or drugs in a timely manner or on acceptable terms, it would have to seek alternative sources of supply.

Glaukos' production of the iStent, iStent inject models, and other products in development is dependent on a select group of third-party suppliers, occasionally exclusive ones. If any of these suppliers fail to deliver the necessary components or drugs in a timely manner or on acceptable terms, Glaukos would be compelled to find other suppliers to maintain its production line.

Glaukos Corporation Price

Glaukos Corporation Price

Glaukos Corporation price | Glaukos Corporation Quote

Estimate Trend

The bottom-line estimate for GKOS is pegged at a loss of $2.18 per share for 2024, 4% narrower than the previous year’s reported loss. The Zacks Consensus Estimate for 2024 revenues is pinned at $356 million, indicating growth of 13.1% from the top line recorded in 2023.

Stocks to Consider

Some better-ranked stocks in the broader medical space are DaVita Inc. DVA, Cardinal Health, Inc. CAH and Cencora COR.

DaVita, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.1%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.

DaVita’s shares have risen 24.4% year to date compared with the industry’s 3.6% growth.

Cardinal Health, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 14.2%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.6%.

CAH’s shares have risen 4.3% year to date compared with the industry’s 2.7% growth.

Cencora, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 9.8%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.7%.

Cencora’s shares have rallied 13.9% year to date compared with the industry’s 0.3% growth.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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