RxSight (NASDAQ: RXST), maker of the only cataract lens that can be adjusted post-surgery, could be undervalued by an eye-popping margin
More than 70% of RxSight Light Adjustable Lens (LAL) patients reported 20/20 or better vision after receiving the lens. Only 36.3% of non-adjustable lens patients reported the same.
RxSight is the crystal-clear leader for patient outcomes in the US$5 billion Intraocular Lens industry, yet it has a microscopic market cap of $367.58M. This warrants a closer look.
Value Relative to Direct Competitors
One might evaluate RxSight in comparison to large, established ophthalmic lens companies.
Two such companies are Alcon AG (SWX: ALC) and EssilorLuxottica SA (EPA: EL). Their price-to-revenue ratios are as follows:
- Alcon: Trading at 4x 2025 revenue
US$10.3B revenue
US$40.0B market cap
- EssilorLuxottica: Trading at 3.79x 2025 revenue
US$33.6B revenue
US$127.0B market cap
RXST's competitive advantage of adjustability, and its statistically superior patient outcomes, could indicate that its revenues will grow at a faster pace than established players like Alcon or EssilorLuxottica. Meanwhile, it trades ($US367.58M) at a smaller 2.7x multiple of its 2025 revenue ($US124.5M). Potential misprice detected.
The concept of the Light Adjustable Lens has already demonstrated eye-watering growth, with RXST's revenue growing at 53.3% p.a. since inception - from $14.7M in 2020 to $124.5M in 2025.
Assuming RxSight continues to grow at above-average rates, valuing the company at a higher price-to-revenue ratio of say, 5x, may not be unreasonable. This simple & clear suggestion would judge the company's value at $622.5M, or 69.4% higher than its current market price.
A Different Lens - Can Revenues Really Grow as Far as the Eye Can See?
The adoption of the Light Adjustable Lens has accelerated rapidly in recent years. Statistics demonstrate that adjustable lenses provide better vision outcomes for patients. The more important question, is whether this will translate into mass adoption.
The problem: out-of-pocket costs for patients relating to the LAL range from $3,500-$8,000 per eye. In comparison, non-adjustable premium lenses have out-of-pocket costs in the lower range of $2,500-$4,500.
Even though the LAL delivers superior outcomes, RxSight's growth potential is capped by the number of cataract patients willing to stomach the extra cost. At least they'll be able to see their bill more clearly.
While there are certainly questions regarding RxSight's growth outlook, it is possible that its value as a competitor to multi-billion dollar IOL makers is significantly more than its current market cap of $367M.
Investors may want to keep an eye on this one.
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Disclaimer
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