Here's Why You Should Retain Glaukos (GKOS) Stock for Now
Glaukos Corporation GKOS is well-poised for growth, backed by favorable clinical trial results and a robust product pipeline. However, stiff competition is a concern.
Shares of this Zacks Rank #3 (Hold) company have rallied 58.51% year to date against the industry’s 10.4% decline. The S&P 500 Index also increased 11.4% in the same time frame.
Glaukos, with a market capitalization of $3.47 billion, is a leading ophthalmic medical technology and pharmaceutical company. It projects earnings growth of 11% for 2024 and also expects to maintain strong performance in terms of revenues.
The company has an average four-quarter earnings surprise of 6.81%.
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Key Catalysts
Glaukos’ sales returned to growth following a declining trend in 2022, reflecting improving macro environment coupled with launches of several new products in the past few quarters. Continued strong demand across international Glaucoma and Corneal Health franchises will be the key topline drivers in the second half of 2023.
Moreover, the commercial launch of iStent infinite in 2023 is boosting the U.S. glaucoma franchise, which will drive growth in the upcoming few quarters. The company’s raised outlook for revenues on its second-quarter earnings call looks promising.
Meanwhile, the new local coverage determinations proposed in June 2023 are likely to remove certain ophthalmic goniotomy and canaloplasty procedures from coverage. This will likely have a positive impact on the iStent business.
In May, the FDA accepted the previously submitted New Drug Application for one of Glaukos’ advanced pipeline candidates, iDose TR. A potential approval for the candidate, expected by 2023-end, will substantially boost Glaukos’ revenues.
Per top-line data from two pivotal studies, GKOS announced that its targeted injectable implant candidate, iDose TR, for glaucoma patients achieved excellent tolerability and a favorable safety profile last year.
The candidate achieved non-inferior reductions in intraocular pressure in three months from its baseline compared with the timolol ophthalmic solution.
Glaukos launched iPrime — a new disco elastic delivery device — in the latter part of the second quarter of 2022. In the first quarter, the company had launched the iAccess device for go anatomy procedures.
The addition of these new devices will provide unique treatment options for surgeons, customers and patients. The iAccess device has gained positive market feedback.
What’s Hurting GKOS?
Glaukos’ competitors include medical companies, academic and research institutions, as well as others that develop new drugs, therapies, medical devices or surgical procedures to treat glaucoma. Thus, intense competition continues to weigh on the company’s overall performance.
Moreover, the U.S. Centers for Medicare & Medicaid Services significantly reduced physician payment rates in 2022 that led to lower U.S. Glaucoma sales volume in the year.
With no significant change in payment rates in 2023, the impact continued through the year and will continue to adversely impact sales in the last quarter of 2023.
Glaukos Corporation Price
Glaukos Corporation price | Glaukos Corporation Quote
Estimate Trend
The bottom-line estimate for GKOS is pegged at a loss of $2.26 per share for 2023, 3.7% wider than the previous year’s reported loss of $2.18. The Zacks Consensus Estimate for revenues is pinned at $306.8 million, indicating growth of 8.5% from that recorded in the prior year.
Stocks to Consider
Some better-ranked stocks in the broader medical space are Align Technology ALGN, McKesson Corporation MCK and Medpace MEDP.
Align Technology, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 17.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ALGN’s earnings surpassed estimates in two of the trailing four quarters and missed twice, delivering an average negative surprise of 1.76%. The company’s shares have risen 42.1% year to date compared with the industry’s 9.3% growth.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.1%.
The stock has gained 16.6% year to date compared with the industry’s 9.3% growth.
Medpace, carrying a Zacks Rank #2 at present, has an estimated growth rate of 16.2% for 2024. MEDP’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 22.28%.
The company’s shares have rallied 14.2% year to date against the industry’s 13% decline.
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