JPMorgan Upgrades Glaukos On CyPass News, Likely Market Share Boost

Wall Street analysts are weighing in on Glaukos Corp GKOS Wednesday after the stock jumped more than 30 percent thanks to a major competitor removing its product from the market.

The Analyst

JPMorgan’s Robbie Marcus upgraded Glaukos from Neutral to Overweight and raised the price target from $42 to $75.

The Thesis

Alcon announced the voluntary withdrawal ofd its CyPass Micro-Stent from the market following new data from a five-year, long-term COMPASS-XT safety study. Alcon advised opthalmic surgeons to stop implanting CyPass stents.

Competition had been the main headwind for Glaukos investors, Marcus said in the upgrade note. (See the analyst's track record here.)

“This development opens up a significant opportunity for Glaukos to take back principally all of the sales being generated by CyPass, with a $20-30 million boost on tap in the balance of 2018 and a $90-million opportunity in 2019,” the analyst said.

The door is now wide open for Glaukos to regain leading market share in the suprachoroidal space, Marcus said. JPMorgan expects Glaukos to gain essentially all of Alcon’s lost market share and grow its sales by 19 percent in 2018.

Investors should see the impact of the shift in market share as soon as the third quarter, the analyst said. The CyPass withdrawal will boost Glaukos' Q3 revenue by roughly $5 million and Q4 revenue by roughly $20 million, he said. 

JPMorgan’s bullish commentary came after William Blair and Stephens also issued positive notes on Glaukos earlier in the day.

Price Action

Glaukos stock surged more than 35 percent Wednesday following the Alcon news. 

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Photo courtesy of Glaukos.