Alcon Earnings: Lukewarm Start to Year Raises Stakes for Back Half of 2025; Tariff Impact Mild

Narrow-moat Alcon reported soft first-quarter earnings. Total sales of $2.5 billion were roughly flat year over year, or up 3% in constant currency, and came in about 150 basis points below our expectation. Mild growth from vision care, driven by contact lenses, was offset by tepid surgical performance, which was dragged down by implantables and equipment. We think the overall contact lens market remains stable despite macro uncertainty and tariff headwinds because brand switches or trade downs are uncommon in the industry. We maintain our fair value estimate of $86 per share (and lower our SWX valuation to CHF 72 from CHF 76 to account for weakening USD). Our 2025 assumptions imply 5% revenue growth and EPS of $3.08, which are in the lower ends of the guided ranges.