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Here's Why You Should Retain Cooper Companies (COO) Stock Now

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The Cooper Companies, Inc. (COO - Free Report) is well-poised for growth backed by strong prospects in both CooperVision (CVI) and CooperSurgical (CSI) business segments. However, forex remains a woe.

The stock gained 44.5% compared with the industry’s growth of 29.1% in a year’s time. The S&P 500 Index has rallied 32.8% in the same time frame.

Cooper Companies — with a market capitalization of $21.31 billion — is a specialty medical device company operating on a global basis. It anticipates earnings to improve 10% over the next five years. The company has a trailing four-quarter earnings surprise of 17.2%, on average.

Zacks Investment Research
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Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).

What’s Hurting the Stock?

Cooper Companies generates a significant portion of its revenues in foreign currencies. Fluctuations in foreign exchange rates may significantly mar its overseas revenues. In the fiscal second quarter of 2021, forex moved against Cooper Companies primarily due to the yen but management anticipates improvement in tax to offset this negative impact.

Key Catalysts

Cooper Companies maintained its leading position in the markets of specialty lenses, supported by highly exclusive products of Biofinity and Clariti. In fact, the company’s flagship silicone hydrogel lenses are expected to deliver strong sales in the coming quarters. In the fiscal second quarter of 2021, it witnessed substantial growth across CooperVision’s Toric, Multifocal, single-use sphere, Non-single use sphere sub units. The company experienced improvement in sales on a geographic basis — with the Americas, EMEA and Asia Pacific exhibiting strength in the fiscal second quarter.

The segment displayed solid performance in the fiscal second quarter, with revenues of $522.6 million, up 25% at constant exchange rate (CER) and 30% on a reported basis. Per management, strength in silicone hydrogel lenses and myopia management contributed to the segmental uptick.

In the fiscal second quarter, MiSight, and Ortho K improved 152% and 112%, respectively. Per management, on the basis of the current strength observed, the company anticipates this portfolio to reach $65 million in revenues in fiscal 2021 and exceed $100 million in fiscal 2022.

Cooper Companies is well positioned to benefit from the expanding CSI product portfolio. Per the fiscal second-quarter 2021 earnings call, CooperSurgical witnessed an excellent quarter with record revenues across all three focus areas — fertility, PARAGARD, and office and surgical medical devices, all displaying robust performances. With respect to fertility, revenues climbed 53% year over year to $84 million, thereby marking the best fertility quarter seen by CooperSurgical. Strength across the product portfolio and around the world contributed to the encouraging performance.

CooperSurgical displayed strength in the fiscal second quarter, with revenues of $196.9 million, up 60% and 58% from the year-ago period on a reported basis and at CER, respectively. The segment benefited from a strong fertility sub-segment and PARAGARD sales.

Estimates Trend

Cooper Companies has been witnessing an upward estimate revision trend for fiscal 2021. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved north by 2.2% to $13.31.

The Zacks Consensus Estimate for the company’s fiscal third-quarter 2021 revenues is pegged at $724.6 million, suggesting growth of 25.3% from the year-ago reported number.

Stocks to Consider

Some better-ranked stocks from the broader medical space are Henry Schein, Inc. (HSIC - Free Report) , Envista Holdings Corporation (NVST - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Henry Schein’s long-term earnings growth rate is estimated at 13.9%.

Envista Holdings’ long-term earnings growth rate is estimated at 27.4%.

Merit Medical’s long-term earnings growth rate is projected at 13.6%.

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