March 13, 2018

GKOS – Although management’s concerns imply the potential for near-term headwinds, longer-term tailwinds continue to support further equity upside

      • Glaukos Corporation (GKOS:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 44.2x Uniform P/E. However, even at these levels, the market has muted expectations for the firm, and although management sentiment suggests the potential for near-term headwinds, should the firm exceed these low expectations, longer-term equity upside would be warranted
      • Specifically, although management appears concerned about iStent and net sales improvements, there are long-term fundamental tailwinds, competitive advantages, and a sizeable market opportunity for GKOS that the market does not appear to be pricing in. As such, should the firm continue to drive robust Uniform ROA expansion, equity upside would be warranted
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