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Omar Venerio
Omar Venerio
Articles (1681) 

Dow Jones Falls Over 500 Points on Wednesday

Alcon jumps on the back of strong first-quarter results

U.S. stocks were in the red on Wednesday, with investors worried that the v-shaped recovery will not be immediate after Federal Reserve Chair Jerome Powesll said, The recovery may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems. The Dow Jones Industrial Average fell 2.80% to 23,138, the S&P 500 Index declined 2.29% to 2,804 and the Nasdaq Composite Index retreated 2.23% to 8,804.

Non-index stocks have also posted gains and losses recently.Shares of Alcon Inc. (NYSE:ALC)gained more than6% on Wednesdayafter the company announcedfirst-quarter results.

The Fort Worth, Texas-based medical company, which specializes in eye care products,posted earningsof 45 centsper share,beating estimates by 11 cents.Revenue of$1.84 billion registered 1.1% year-over-year growth, toppingexpectations by $150 million.

"Our first quarter reflects the solid underlying growth prospects of our business," CEO David Endicott said. "We saw strong sales growth in both franchises during the first two months of the year, led by key growth brands and new product launches. However, as the COVID-19 outbreak spread worldwide, the widespread shutdowns negatively impacted demand by mid-March."

Worldwide sales for the quartertotaled $1.8 billion, up 3%, or 4% on a constant currency basis, compared to the first quarter of 2019. This was fueled by growth in AT-IOLs, Dailies Total 1 contact lenses and Systane Complete eye drops. Also, the launch of Pataday for the treatment of ocular allergiescontributed to the expansion. The growth in January and February was offset by a decline in March due to the Covid-19 pandemic.

By segment, the surgical business'net sales declined 2% and were $984 million compared to the prior-year quarter. There was solid growth in the implantablessubcategory and strong sales for Panoptix in the U.S. and Japan. In the vision caredivision, net sales grew 8% to$838 million, which included contact lenses and ocular health. This was driven by strong sales of Dailies Total 1 and Precision1.

Looking at the financial position, Alcon ended the quarter with $760 million in cash. Debt totaled $3.5 billion, with a net debt position of $2.7 billion to refinance certain pre-spinoff borrowings. In order to preserve the financial liquidity, the company is managing working capital, cash flow and expenses and prioritizing capital allocation needs.

Hedge funds were active at the end of March. Kahn Brothers (Trades, Portfolio) reduced its holding to 3,956 shares, whileKen Fisher (Trades, Portfolio) trimmed his position by 16% to 814,533 shares.TheVanguard Health Care Fund (Trades, Portfolio) curbed its stake by 32% to 2,550,401 shares.

Gainers

Losers

Global markets

The main European stock markets tradedin the red.The U.K.'s FTSE 100 lost 1.51%, France's CAC 40 fell 2.85%, Germany's Dax declined 2.56% and Spain's Ibex 35 dipped 1.94%.

In Asia, Japan's Nikkei 225 fell 0.49%, Indias BSE Sensex jumped 2.03%, Hong Kong's Hang Seng declined 0.27% and China's Shanghai Composite rose 0.22%.

Disclosure:The author holds no positions in any stocks mentioned.

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About the author:

Omar Venerio
Omar Venerio is a capital markets, derivatives, corporate finance and financial management professor and Area Head of Finance. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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