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.
The Fort Worth, Texas-based medical company, which specializes in eye care products, posted earningsof 45 cents per 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 quarter totaled $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 allergies contributed 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 implantables subcategory and strong sales for Panoptix in the U.S. and Japan. In the vision care division, 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, while Ken Fisher (Trades, Portfolio) trimmed his position by 16% to 814,533 shares. The Vanguard Health Care Fund (Trades, Portfolio) curbed its stake by 32% to 2,550,401 shares.
- General Mills Inc. (GIS, Financial) 1.2%
- Domino's Pizza Inc. (DPZ, Financial) +1%
- Kroger Co. (KR, Financial) +1%
- Edison International (EIX, Financial) +0.6%
- Albemarle Corp. (ALB, Financial) +0.5%
- Merck & Co Inc. (MRK, Financial) +0.3%
- Coty Inc. (COTY, Financial) -15%
- Under Armour Inc. (UAA, Financial) -11%
- Tapestry Inc. (TPR, Financial) -11%
- National Oilwell Varco Inc. (NOV, Financial) -10.7%
- Xerox Holdings Corp. (XRX, Financial) -10.2%
The main European stock markets traded in 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%, India’s 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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