STAA stock should shine brightly as its customer base expands

photo of an eye with cataract

Key points

  • STAAR Surgical is the leading manufacturer of implantable ocular lenses (IOLs) used for cataract surgery.
  • Its EVO ICL sales reached the highest levels in the United States in the first quarter of 2024 since its FDA approval in March 2022.
  • With more than 90% of people over the age of 65 developing cataracts, STAAR Surgical has a long growth trajectory ahead of an aging population.
  • 5 stocks we like best from STAAR Surgical

STAAR Surgical Co. NASDAQ: STAA develops and manufactures intraocular lenses (IOLs) used to replace a person’s natural lenses during cataract surgery. Its portfolio includes the EVO line of Collamer implantable lenses (ICLs) used to treat myopia (myopia), refractive error (astigmatism), and hyperopia (presbyopia). The company competes directly with Alcon Inc. NYSE:ALC AND Johnson & Johnson NYSE:JNJ in the IOL segment.

What are cataracts?

Cataracts are clouding of the lens that occurs with aging and is the most common cause of vision loss. Over 21 million people in America over the age of 40 suffer from cataracts, and over 90% of people over the age of 65 develop cataracts. The medical company is a leader and pioneer in the field of cataract treatment and delivery systems. The company is a natural benefactor of the aging population and recently raised its outlook for 2024.

LASIK vs. IOL Replacement

The topic of LASIK surgery versus IOL replacement surgery often comes up as to which is superior. While both address vision problems, they differ in the procedure and symptoms they attempt to treat.

IOL replacement is an outpatient surgical procedure in which the surgeon makes a small incision in the cornea to remove the patient’s cloudy lens and implant the synthetic IOL. The IOL is bendable, which allows for an even smaller incision and faster healing. A LASIK procedure creates a flap in the cornea and reshapes the underlying corneal tissue, often to correct a refractive error. The flap is repositioned to heal naturally.

More or less invasive surgery

IOL replacement is more invasive and in rare cases can be prone to infection. It can also be reversed and is suitable for adults with cataracts. The IOL is said to be faster in terms of vision improvement and healing.

LASIK is less invasive because it uses two precision lasers. However, ideal patients are expected to have stable vision, good eye health, and plenty of corneal tissue since LASIK removes some of it. LASIK is permanent.

staa stock daily mug template

Daily mug template

The STAA candlestick chart illustrates a cup pattern. The cup lip line formed at $58.40 on July 25, 2023, while the stock fell to a low of $26.66 on February 5, 2024. STAA rebounded to $40.45 as the Relative Strength Index daily (RSI) rose through the 70 band. The increase in guidance for the first quarter of 2024 took the RSI to the 83 band before peaking and falling back to the 70 band. Pullback support levels are at $ 43.09, $40.45, $35.12 and $31.33.

Double-digit growth

STAAR reported fourth-quarter 2023 earnings per share of 16 cents, missing consensus estimates by a cent. Revenue grew double-digits by 19.1% to $76.27 million versus $75.94 million. ICL sales increased 22% to $74.6 million, and ICL units grew 19% year over year. Gross margin improved to 79.6% from 77.7% last year. Net income rose to $7.8 million from $6.8 million last year. The company ended the year with $232.4 million in cash and cash equivalents.

Guide lowered

On February 26, 2024, STAAR Surgical released lowered full-year 2024 guidance with EPS of 70 cents versus consensus estimates of 91 cents. Revenues were expected between $335 million and $340 million versus $348.96 million.

CEO Insights

Tom Frinzi, CEO of STAAR Surgical, said all large markets experienced positive sales growth. ICL unit growth has outpaced the refraction industry rate by 25 points for three consecutive years. EVO ICL sales growth was expected to grow 10% in the Americas, 7% in APAC and 10% in China. Global ICL sales increased 22% year-over-year, which includes year-over-year growth of 18% in EMEA and 30% in China.

Frinzi concluded: “With healthy margins, no debt and a record $232 million in cash, cash equivalents and investments on the balance sheet, we will continue to strategically invest in our growth opportunities. We are also enhancing the surgeon experience, both in the environmental clinical setting and in promoting the efficiency of clinical practice. EVO ICL is the next logical step in refractive innovation with clear differentiators in terms of outcomes and patient satisfaction.”

Stifel moves to a purchase

On March 11, 2024, Stifel upgraded its rating from Hold to Buy on STAA stock. He raised his price target from $30 to $50. STAAR surgical analyst ratings and price targets I’m on MarketBeat.

Fake head: raised guide

Ironically, on April 4, 2024, STAAR Surgical released upward guidance for the first quarter of 2024. Revenues are expected to exceed $77 million in the first quarter versus consensus estimates of $72.08 million. ICL sales in the United States were $5 million, reaching the highest quarterly levels since receiving FDA approval for EVO ICL in March 2022.

Fake head: upward guidance

Fast forward to April 4, 2024, STAAR Surgical raised its forecast for the first quarter of 2024 to $77 million versus consensus estimates of $72.08 million. U.S. ICL sales are expected to be approximately $5 million for the quarter, representing the highest U.S. ICL sales since FDA approval in March 2022. Cash and cash equivalents rose at $248 million.

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