National Vision Holdings, Inc. (EYE) is expected to perform well in the coming quarters due to the strength of its managed care business. The company’s stable liquidity provides optimism for targeted investments in support of growth initiatives. In the last reported quarter, National Vision achieved positive sales growth in its stores, surpassing the overall consolidated growth.
However, the termination of the long-standing partnership with Walmart and intense competition in the industry may impact National Vision’s business performance.
In the past year, National Vision’s stock has declined by 51.4%, compared to a 3.4% fall for the industry and a 14.5% rise for the S&P 500 composite. The company has a market capitalization of $1.29 billion and projects long-term estimated earnings growth of 19.8%, higher than the industry average of 14.6%. National Vision has surpassed earnings estimates in three of the last four quarters, with an average earnings surprise of 32.67%.
Upsides
The company’s Owned and Host subsegments are gaining market share, driven by factors such as age-related eyesight deterioration and the need for corrective eyewear. The expansion of remote medicine technology is also contributing to increased sales. National Vision plans to expand into at least 200 additional remote-enabled stores in 2023.
National Vision has a strong solvency and capital structure with ample cash and cash equivalents to pay off short-term debt. The company is focused on future strategies, including store expansion and marketing to drive traffic to its stores. It plans to allocate $115 million to $120 million in capital expenditures in 2023 to support growth initiatives.
Downsides
The termination of the Walmart contract is expected to result in significant noncash impairment charges, which may impact the company’s business. The transition period and potential disruptions could also negatively affect sales, productivity, and the retention of associates and optometrists.
National Vision faces tough competition from other national retailers, as well as online sellers of contact lenses and eyewear.
Estimate Trend
The Zacks Consensus Estimate for National Vision’s 2023 earnings per share (EPS) has remained constant at 53 cents in the past 30 days. The company’s 2023 revenues are projected to increase by 5.5% compared to the previous year.
Key Picks
Other stocks in the medical space that are performing well include Haemonetics (HAE), SiBone (SIBN), and Quanterix (QTRX).
Haemonetics has consistently beaten earnings estimates in the last four quarters and has shown strong stock performance. SiBone has a high estimated earnings growth rate compared to the industry average. Quanterix has also surpassed earnings estimates in the last four quarters and has a positive stock performance.
For more information and the complete list of top stock picks, please refer to the original article on Zacks.com.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
