Bearish stock to watch: Alcon AG (NYSE: ALC)

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Alcon AG (NYSE: ALC), the eye-care company spun off from Novartis AG, stock lost over 3.2% in the pre market session of November 20th, 2019 (Source: Google finance). The company in the third quarter of FY 19 has reported decrease in the net loss to $66 million, from $207 million, a year earlier. Core earnings has declined to 46 cents a share from 50 cents a share a year earlier. For the third quarter of 2019, worldwide sales increased by 4% on a reported basis and an increase of 6% on a constant currency basis $1.8 billion as compared to the same quarter of the previous year. The sales grew due to the Company’s four key growth platforms within the Surgical and Vision Care segments, that includes AT-IOLs, Vitreoretinal, DAILIES TOTAL contact lens and Systane Complete eye drops. The Company has ended the third quarter with a cash & cash equivalents of $792 million. Debt totaled $3.5 billion at the end of September, 2019, including $1.5 billion in borrowings executed immediately prior to the Spin-Off and $2 billion in senior notes issued in September 2019. The Company has ended the third quarter with a net debt position of $2.7 billion.

Alcon expects worldwide net sales for FY 19 to increase 4% to 5% on a constant currency basis and incur $500 million in separation costs, compared with its earlier view of 2019 sales growth of 3% to 5% net sales growth and $300 million in separation costs. The Company has reiterated its long-term financial goals to be mid-single digit sales CAGR, core operating margin to be in the range of low-to-mid 20 percent and free cash flow to be in the range of 2.5-3x last year’s level.

Alcon has projected $300 million in costs tied to a multi-year restructuring that’s projected to result in savings of $200 million to $225 million on an annualized run rate by 2023. The company will invest these efficiency gains into key drivers that will accelerate growth, create shareholder value and position Alcon to achieve its long-term financial goals.  After the comprehensive review, the Company had identified significant efficiencies from organizational realignment.

Additionally, ALC has approved the issuance of 3 million additional registered shares of nominal value CHF 0.04 per share. The transaction will increase the number of shares available for issuance under the Company’s equity compensation plans, however there will be no immediate impact on the number of shares outstanding or earnings per share. The transaction is expected to close by year-end.

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