Pieter Hundersmarck of Castra presented his investment thesis on Alcon AG (Switzerland: ALC, NYSE: ALC) at European Investing Summit 2025.
Thesis summary:
Alcon is the world’s largest eye care device company, domiciled in Switzerland and spun-off from Novartis in 2019. The company operates two segments: Surgical (56% of sales) and Vision Care (44% of sales). Pieter analyzes the company from a quality growth perspective, noting its market leadership in an attractive space. The company is growing its market share, partly through bolt-on acquisitions, within a total addressable market (TAM) estimated at $35 billion.
The Surgical segment, which accounts for 60% of EBIT, provides equipment, consumables, and implantables (IOLs) for ophthalmic surgery. Pieter finds this division attractive due to its wide moat, built on a razor-razorblade model. Alcon has an installed base of 28,000 surgical units, which drives recurring, high-margin revenue from proprietary consumables. This model, combined with brand leadership in premium IOLs like PanOptix and Vivity, creates high switching costs and provides pricing power.
The Vision Care segment consists of contact lenses and ocular health products, operating on a B2C model where Alcon competes on comfort, technology, and cost. The market benefits from tailwinds such as an aging population, which supports mid-single-digit growth. Pieter views Alcon as a market share gainer, citing its share growth in the global vision care market from 11.7% in 2020 to 13.5% in 2024.
The central thesis rests on margin acceleration and rising ROIC, which Pieter believes the market undervalues. ROIC has already improved from 6.1% in 2021 to 14.0% in 2024. The key catalyst is the roll-out of the new UNITY surgical platform, which is set to replace the 28,000-unit installed base over a five-year period. Pieter argues this all-in-one platform offers superior hospital throughput and unit economics, which should drive operating margins from current levels toward 20-25%. The primary risk to the thesis is execution on this complex platform launch.
Pieter’s valuation model is based on the UNITY roll-out, projecting a total revenue CAGR of ~7%. He forecasts operating margins improving to a 20-25% range, driven by manufacturing efficiencies and the premium product mix. Applying a 20x P/E multiple, his model yields a valuation range of $65 (bear) to $138 (bull). Compared to a recent price of $72, Pieter sees an asymmetric payoff, believing the market is underestimating the impact of the upcoming platform replacement cycle.
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European Investing Summit 2025 was held from October 28 to November 3, 2025. The content of this website is not an offer to sell or the solicitation of an offer to buy any security. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.
Slides
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