STAAR Surgical Q3 sales fall on China comparison; sees gross margin improving

Overview

• U.S. implantable lens maker's Q3 net sales fell 12% yr/yr, but rose 21% excluding deferred China sales

• Q3 net income and EPS declined yr/yr, but prior-year results were boosted by deferred China revenue

• Company authorized $50 mln share buyback program

Outlook

• STAAR Surgical expects fourth-quarter gross margins to rise above third-quarter levels

• Company expects unit costs to improve further in 2027 as both production facilities run at full capacity

• STAAR Surgical says China seasonality should moderate revenue and earnings in Q4, but not free cash flow

Result Drivers

• CHINA SALES MIX - China sales rose 31% excluding deferred revenue, with higher average selling prices driven by increased EVO+ and toric lens adoption

• OPERATIONAL TRANSITION - Completed move of all China-bound ICL manufacturing to Switzerland, expected to reduce tariff exposure and improve gross margin going forward

• TEMPORARY COST PRESSURES - Gross margin was negatively affected by higher manufacturing costs from low production volumes, increased freight costs, tariffs, and inventory provisions; these pressures are expected to ease in Q4

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 3 "strong buy" or "buy", 6 "hold" and 1 "sell" or "strong sell"

• The average consensus recommendation for the medical equipment, supplies & distribution peer group is "buy."

• Wall Street's median 12-month price target for STAAR Surgical Company is $27.00, about 7.3% above its November 3 closing price of $25.17

• The stock recently traded at 50 times the next 12-month earnings vs. a P/E of 53 three months ago

Reuters Recommended Reads

• Nov 3 - Germany's Fresenius Medical says Q3 results weighed by China; narrows forecast

• Nov 4 - Zimmer Biomet Q3 sales beat estimates, raises FY outlook

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)