Alcon AG (NYSE:ALC) saw its stock fall more than 2% on Thursday following a rating cut by J.P. Morgan, citing disappointing quarterly performance and reduced visibility on earnings.
David Adlington, an analyst at J.P. Morgan, noted that “another soft quarter, combined with a further cut to guidance, is likely to prompt questions about the company’s growth outlook for fiscal 2026.”
While Alcon’s management reassured investors that new product launches are proceeding as planned, J.P. Morgan pointed out that this statement would carry more weight if supported by additional data. The brokerage highlighted that the fourth quarter is heavily loaded with growth, but overall market expansion remains slow, and intraocular lens share losses outside the U.S. continue.
J.P. Morgan also indicated that consensus expectations of roughly 17% EPS growth for fiscal 2026 may be overly optimistic, given that fiscal 2025 guidance was bolstered by a one-off low tax rate and foreign exchange gains. The firm added that the annualization of tariffs and dilution from recent acquisitions could further challenge growth in fiscal 2026.
As a result, the analysts downgraded Alcon shares from “overweight” to “neutral” and lowered the price target to SFr 62.8 for June 2027, down from SFr 94.7 for June 2026. This reduction reflects both lower forecasts and a cut in the sector premium from 50% to 25% amid tempered growth expectations.
J.P. Morgan concluded that evidence of stronger market growth or successful product launches could reverse the downgrade, but cautioned that such developments are unlikely to emerge before Alcon reports its fourth-quarter results.
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