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Reasons to Retain The Cooper Companies (COO) in Your Portfolio
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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. Acquisitions boost the company’s portfolio and buoy optimism. However, unfavorable currency movements and rising costs continue to hurt revenues and margins, respectively.
Shares of this Zacks Rank #3 (Hold) company have declined 6% year to date against the industry's 11.7% growth. The S&P 500 Index has gained 15.4% in the same time frame.
The Cooper Companies, with a market capitalization of $15.4 billion, is a specialty medical device company operating on a global basis.
The company’s bottom line is estimated to improve 10% over the next five years. Its earnings beat estimates in two of the trailing four quarters, missed the mark in one and met once, delivering an average surprise of 0.09%.
Image Source: Zacks Investment Research
What's Driving the Company’s Performance?
COO has been leading the specialty lenses market, owing to highly exclusive products of Biofinity and Clariti, and growing products of MyDay and MiSight. Its flagship silicone hydrogel lenses are expected to drive strong sales in the upcoming quarters.
In the fiscal third quarter of 2023, the company witnessed substantial growth across CVI’s Toric, Multifocal and single-use sphere subunits. It also experienced an organic improvement in sales on a geographical basis, with EMEA, the Americas and the Asia-Pacific markets exhibiting strength in the aforementioned quarter.
The CVI segment continued to display solid performance in the same time frame, with its revenues rising 12% at a constant exchange rate and on an organic basis to $630.2 million. Per management, strong demand for silicone hydrogel lenses contributed to the segmental uptick.
CVI revenues are likely to be in the $2.414-$2.425 billion range (organic growth of 10-11%) in fiscal 2023.
The Cooper Companies is well-positioned to benefit from the expanding CSI product portfolio as well. In fiscal third-quarter 2023, CSI witnessed revenue growth in two focus areas — fertility and office and surgical products.
Revenues from fertility increased 8% year over year to $121.6 million, indicating sustained solid performance. Sales of office and surgical products improved 8% to $178.4 million.
For fiscal 2023, CSI revenues are expected to be in the $1.164-$1.17 billion range, implying organic growth of 7-7%.
Acquisition to Drive Growth
In 2022, the company formed a joint venture, SightGlass Vision, with another global vision care leader, EssilorLuxottica. It did so to accelerate the commercialization of novel spectacle lens technologies and expand the myopia management category.
What's Weighing on the Stock?
The Cooper Companies generates a significant portion of its revenues in foreign currencies. Fluctuations in foreign exchange rates may significantly mar its overseas revenues.
Moreover, an increase in cost of sales, and selling, general and administrative expenses is concerning. Contraction in operating margin during the first nine months of fiscal 2023 is disappointing.
The Zacks Consensus Estimate for the company's fiscal 2023 revenues is pegged at $3.59 billion, implying growth of 8.4% from the 2022 reported figure. The same for adjusted EPS is pinned at $12.81 for 2023, indicating an improvement of 3.1% from the previous year’s recorded level.
In the past 30 days, COO witnessed an upward earnings estimate revision of 1 cent to $12.81 per share.
ALGN’s earnings surpassed estimates in two of the trailing four quarters and missed twice, delivering an average negative surprise of 1.76%. The company’s shares have risen 35% year to date compared with the industry’s 38% growth.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.1%.
The stock has gained 18.7% year to date compared with the industry’s 38% growth.
Medpace, carrying a Zacks Rank #2 at present, has an estimated growth rate of 16.2% for 2024. MEDP’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 22.28%.
The company’s shares have rallied 15.9% year to date against the industry’s 12.5% decline.
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Reasons to Retain The Cooper Companies (COO) in Your Portfolio
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. Acquisitions boost the company’s portfolio and buoy optimism. However, unfavorable currency movements and rising costs continue to hurt revenues and margins, respectively.
Shares of this Zacks Rank #3 (Hold) company have declined 6% year to date against the industry's 11.7% growth. The S&P 500 Index has gained 15.4% in the same time frame.
The Cooper Companies, with a market capitalization of $15.4 billion, is a specialty medical device company operating on a global basis.
The company’s bottom line is estimated to improve 10% over the next five years. Its earnings beat estimates in two of the trailing four quarters, missed the mark in one and met once, delivering an average surprise of 0.09%.
Image Source: Zacks Investment Research
What's Driving the Company’s Performance?
COO has been leading the specialty lenses market, owing to highly exclusive products of Biofinity and Clariti, and growing products of MyDay and MiSight. Its flagship silicone hydrogel lenses are expected to drive strong sales in the upcoming quarters.
In the fiscal third quarter of 2023, the company witnessed substantial growth across CVI’s Toric, Multifocal and single-use sphere subunits. It also experienced an organic improvement in sales on a geographical basis, with EMEA, the Americas and the Asia-Pacific markets exhibiting strength in the aforementioned quarter.
The CVI segment continued to display solid performance in the same time frame, with its revenues rising 12% at a constant exchange rate and on an organic basis to $630.2 million. Per management, strong demand for silicone hydrogel lenses contributed to the segmental uptick.
CVI revenues are likely to be in the $2.414-$2.425 billion range (organic growth of 10-11%) in fiscal 2023.
The Cooper Companies is well-positioned to benefit from the expanding CSI product portfolio as well. In fiscal third-quarter 2023, CSI witnessed revenue growth in two focus areas — fertility and office and surgical products.
Revenues from fertility increased 8% year over year to $121.6 million, indicating sustained solid performance. Sales of office and surgical products improved 8% to $178.4 million.
For fiscal 2023, CSI revenues are expected to be in the $1.164-$1.17 billion range, implying organic growth of 7-7%.
Acquisition to Drive Growth
In 2022, the company formed a joint venture, SightGlass Vision, with another global vision care leader, EssilorLuxottica. It did so to accelerate the commercialization of novel spectacle lens technologies and expand the myopia management category.
What's Weighing on the Stock?
The Cooper Companies generates a significant portion of its revenues in foreign currencies. Fluctuations in foreign exchange rates may significantly mar its overseas revenues.
Moreover, an increase in cost of sales, and selling, general and administrative expenses is concerning. Contraction in operating margin during the first nine months of fiscal 2023 is disappointing.
The Cooper Companies, Inc. Price
The Cooper Companies, Inc. price | The Cooper Companies, Inc. Quote
Estimates Trend
The Zacks Consensus Estimate for the company's fiscal 2023 revenues is pegged at $3.59 billion, implying growth of 8.4% from the 2022 reported figure. The same for adjusted EPS is pinned at $12.81 for 2023, indicating an improvement of 3.1% from the previous year’s recorded level.
In the past 30 days, COO witnessed an upward earnings estimate revision of 1 cent to $12.81 per share.
Stocks to Consider
Some better-ranked stocks in the broader medical space are Align Technology (ALGN - Free Report) , McKesson Corporation (MCK - Free Report) and Medpace (MEDP - Free Report) .
Align Technology, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 17.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ALGN’s earnings surpassed estimates in two of the trailing four quarters and missed twice, delivering an average negative surprise of 1.76%. The company’s shares have risen 35% year to date compared with the industry’s 38% growth.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.1%.
The stock has gained 18.7% year to date compared with the industry’s 38% growth.
Medpace, carrying a Zacks Rank #2 at present, has an estimated growth rate of 16.2% for 2024. MEDP’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 22.28%.
The company’s shares have rallied 15.9% year to date against the industry’s 12.5% decline.