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Ocugen Stock Might be up 34% in 2020 but There are Other Eye Care Plays

There’s no doubt that Ocugen (NASDAQ:OCGN) is on a roll in 2020. Ocugen stock is up 34% year to date through Jan. 15. However, the clinical-stage biopharma company that specializes in the development of therapies used to treat rare and underserved eye diseases is not everyone’s cup of tea. 

Ocugen Stock Might be up 34% in 2020 but There are Other Eye Care Plays
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Trading at well under a buck as I write this, Ocugen has no revenue and a whole lot of expenses to go along with its Phase 3 clinical trial of OCU300, a drug designed to treat patients with Graft Versus Host Disease (GVHD). MedicineNet defines GVHD as “an immune condition that occurs in a patient after transplantation when immune cells present in donor tissue (the graft) attack the host’s own tissue.”

It sounds pretty serious to me. 

As I stated in December, Ocugen’s losses through the first nine months were $33 million, almost three times its losses in the same period a year earlier — and those losses are bound to accelerate. 

Except for a couple of specific investors, Ocugen is not a stock for average people. Instead, I recommended Bausch Health Companies (NYSE:BHC), a business that has a very rocky backstory but has managed to turn the corner. 

If BHC doesn’t do it for you, and you’re not into penny stocks, here are a couple of other eye-related companies that might be interesting, not to mention safer investments.

Ocugen Stock Alternatives

On April 9, 2019, Alcon (NYSE:ALC), the largest eye care device company in the world (contact lenses, etc.), was spun-off by its parent, Novartis (NYSE:NVS), into an independent, publicly traded company. 

In the first nine months of 2019, Alcon had sales of $5.5 billion, 4% higher year-over-year on a reported basis, and 6% higher, excluding currency. The company has two operating segments: Surgical (56% of sales) and Vision Care (44%). 

A big winner for its surgical business is its PanOptix trifocal lens for cataract patients that dramatically improves night vision. On the vision care side of the company, Alcon’s preparing to launch its Precision1 daily disposable contact lenses into the U.S. market. Those should be available early this year. 

On the bottom line, Alcon’s core earnings were $702 million, 10.3% less than in the same period a year earlier. 

As it implements a multi-year transformation program that’s intended to make the company more efficient while reducing its operating costs, investors should have every expectation that shares will move up from $61 where they currently trade.

With a market capitalization of almost $30 billion, Alcon is no penny stock.

Not All Retail Sucks

Companies like Warby Parker came along because the founders felt eyeglasses were too expensive. My wife bought her most recent pair of glasses from Warby Parker, and she loves them. And while Warby now has a ton of retail locations (120) in the U.S. and Canada (3), it got its start online.

Americans, and Canadians, for the most part, still like to buy their eyeglasses in-store. 

National Vision Holdings (NASDAQ:EYE) is one of the largest optical retailers in the U.S. with more than 1,100 stores in 44 states, D.C., and Puerto Rico. It also has vision centers within some Walmart’s (NYSE:WMT), Fred Meyer stores, and a few military bases. 

In the first nine months of 2019, National Vision opened 63 net new stores, had same-store sales growth of 5.6%, grew sales by 12.0% to $1.3 billion, and generated adjusted net income of $57.4 million, 12.8% higher than in the same period. 

The company’s stock had a rough ride last fall but has since recovered nicely. It is now up 49% from its October 2017 IPO price of $22.

This is a solid company with a sound balance sheet and decent growth ahead of it. As people age, the need for National Vision’s services isn’t going to go away. 

At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.


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