STAA - What's going on with STAAR Surgical shares?

2024-04-05 10:13:16 ET

STAAR Surgical (NASDAQ: STAA) received an upgrade from William Blair on Friday.

The stock has been moved from Market Perform to Outperform status.

STAAR Surgical shares rose by over 13% on Thursday after the company issued strong preliminary first-quarter net sales guidance.

Why the upgrade?

The decision to upgrade comes on the heels of STAAR Surgical’s robust performance in the current quarter, which surpassed expectations previously set by conservative guidance.

Despite this strong showing, the company made only minor adjustments to its full-year guidance range, suggesting a potential for sustained upward momentum in its financials throughout the year, contingent upon stable macroeconomic conditions.

While STAAR Surgical’s valuation indicates growth potential, significant expansion is expected to be somewhat restrained until there is clearer visibility into the company’s growth trajectory. Achieving this enhanced visibility may necessitate several quarters of consistent and robust performance.

Analysts anticipate that the primary driver behind the anticipated growth in STAAR Surgical’s stock will be sales outperforming current projections.

There’s a potential for mid-single-digit percentage growth above existing estimates, potentially translating into low-double-digit growth in 2024 and possibly reaching mid-teen growth by 2025.

What’s the current valuation of STAAR Surgical?

Despite the positive outlook, the current valuation of STAAR Surgical shares stands at 5.3 times the firm’s unchanged sales estimate of $386.9 million for 2025.

Consequently, William Blair is reevaluating the financial model for STAAR Surgical in light of recent developments.

Nonetheless, the upgrade reflects the firm’s anticipation that the company’s stock performance will be driven by sales surpassing current estimates.

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