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COO Stock Gains on Q3 Earnings & Revenue Beat, Margins Up

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The Cooper Companies, Inc. (COO - Free Report) delivered adjusted earnings per share (EPS) of 96 cents in the third quarter of fiscal 2024, which improved 14.3% year over year. The figure surpassed the Zacks Consensus Estimate by 5.5%.

GAAP EPS for the quarter was 52 cents, indicating a 20.9% increase from the year-ago figure.

COO’s Revenues in Detail

Cooper Companies registered revenues of $1 billion in the fiscal third quarter, up 7.8% year over year on a reported basis. The figure surpassed the Zacks Consensus Estimate by 0.6%.

The quarterly revenues were up 10% at constant exchange rate (CER) and 8% organically, year over year.

Robust segmental performances drove the top line in the fiscal third quarter.

Shares of this company were up 4.7% in after-hours trading.

Cooper Companies’ Segment Details

COO conducts its business via two reportable segments — CooperVision (CVI) and CooperSurgical (CSI).

In the third quarter of fiscal 2024, the CVI segment’s revenues totaled $675.6 million, up 7% on a reported basis, up 9% at CER and up 10% organically year over year. This figure compares to our segmental projection of $674 million.

Category-wise, CVI derives revenues from Toric and multifocal, and Sphere, other.

In the fiscal third quarter, Toric and multifocal revenues were $326.4 million, up 10% on a reported basis, up 12% at CER and up 12% organically year over year. This figure compares to our projection of $322 million.

Sphere, other revenues in the fiscal third quarter were $349.2 million, up 5% on a reported basis, up 7% at CER and up 8% organically year over year. This figure compares to our projection of $352 million.

Geographically, CVI derives revenues from the Americas, Europe, the Middle East, and Africa (EMEA) and Asia Pacific.

In the fiscal third quarter, Americas revenues were $279.8 million, up 13% both on a reported basis and organically year over year. This figure compares to our projection of $274.8 million.

EMEA revenues in the fiscal third quarter were $256.5 million, up 6% on a reported basis, up 7% at CER and up 7% organically year over year. This figure compares to our projection of $253 million.

Asia Pacific revenues in the fiscal third quarter were $139.3 million, up 7% both at CER and organically year over year. This figure compares to our projection of $146.2 million.

In the third quarter of fiscal 2024, the CSI segment’s revenues totaled $327.2 million, up 9% on a reported basis, up 10% at CER and up 5% organically year over year. This figure compares to our segmental projection of $317.8 million.

Category-wise, CSI derives revenues from Office and surgical, and Fertility.
In the fiscal third quarter, Office and surgical revenues were $197.9 million, up 11% on a reported basis, up 11% at CER and up 2% organically year over year. This figure compares to our projection of $191.3 million.

Fertility revenues in the fiscal third quarter were $129.3 million, up 6% on a reported basis, up 9% at CER and up 10% organically year over year. This figure compares to our projection of $126.5 million.

The Cooper Companies, Inc. Price, Consensus and EPS Surprise

The Cooper Companies, Inc. Price, Consensus and EPS Surprise

The Cooper Companies, Inc. price-consensus-eps-surprise-chart | The Cooper Companies, Inc. Quote

COO’s Margin Trend

In the quarter under review, Cooper Companies’ gross profit rose 8.7% to $663 million. The gross margin expanded 54 basis points (bps) to 66.1%. We had projected 65.9% of gross margin for the fiscal third quarter.

Selling, general and administrative expenses rose 1.6% to $381.1 million, while research and development expenses increased 6.8% to $39 million. Adjusted operating costs totaled $420.1 million, reflecting a 2% increase from the prior-year quarter.

Adjusted operating profit totaled $242.9 million, reflecting a 22.5% increase from the prior-year quarter. The adjusted operating margin in the fiscal third quarter expanded 290 bps to 24.2%.

Cooper Companies’ Financial Position

COO exited third-quarter fiscal 2024 with cash and cash equivalents of $109.7 million compared with $112.4 million at the fiscal second-quarter end.

Total debt at the end of third-quarter fiscal 2024 was $2.63 billion compared with $2.71 billion at the fiscal second-quarter end.

COO’s Guidance

Cooper Companies has provided its financial outlook for both the fourth quarter of fiscal 2024 and the full fiscal year.

For the fiscal fourth quarter, the company expects revenues in the range of $1,015 million-$1,036 million, reflecting an organic growth of 7-9.5% year over year. The Zacks Consensus Estimate is pegged at $1.01 billion.

For the fiscal fourth quarter, COO expects the CVI segment’s revenues to be in the range of $673 million-$685 million (suggesting an organic growth of 8-10% year over year), while the CSI segment’s revenues are projected to lie between $342 million and $350 million (suggesting an organic growth of 6-8% year over year).

For the fiscal fourth quarter, adjusted EPS is expected within 98 cents-$1.01. The Zacks Consensus Estimate is pegged at 96 cents.

For fiscal 2024, the company expects revenues in the range of $3,892 million-$3,913 million (reflecting an organic growth of 8-8.5% from the comparable fiscal 2023 period), up from the previous outlook of $3,863 million-$3,905 million (reflecting an organic growth of 7.5-8.5% from the comparable fiscal 2023 period). The Zacks Consensus Estimate is pegged at $3.88 billion.

For fiscal 2024, COO expects the CVI segment’s revenues in the range of $2,606 million-$2,618 million (reflecting an organic growth of 9-9.5% from the comparable fiscal 2023 period), up from the previous outlook of $2,591 million-$2,613 million (reflecting an organic growth of 8.5-9.5% from the comparable fiscal 2023 period).

For fiscal 2024, the company expects the CSI segment’s revenues in the range of $1,286 million-$1,294 million (reflecting an organic growth of 5.5-6.5% from the comparable fiscal 2023 period), up from the previous outlook of $1,272 million-$1,292 million (reflecting an organic growth of 5-7% from the comparable fiscal 2023 period).

For the full fiscal year, adjusted EPS is expected to be within $3.64-$3.67, up from the prior outlook of $3.54-$3.60. The Zacks Consensus Estimate is pegged at $3.57.

Our Take

Cooper Companies exited the third quarter of fiscal 2024 with better-than-expected results and solid segmental performances. The uptick in overall revenues and bottom line was also impressive. CVI segment’s geographical performances were also encouraging. The expansion of both margins bodes well for the stock.

This month, COO’s CSI segment acquired U.S.-based medical device company, obp Surgical. On the earnings call, management confirmed the recent launch of the company’s new culture and transfer media in Europe, the new FastTrack genomics testing (which is now launched globally) and Cooper Companies’ premier cryo management software — embryo options — which recently launched in targeted European countries. These also look promising for the stock.

COO’s Zacks Rank and Other Key Picks

Cooper Companies currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the broader medical space that have announced quarterly results are DaVita Inc. (DVA - Free Report) , Quest Diagnostics Incorporated (DGX - Free Report) and Boston Scientific Corporation (BSX - Free Report) .

DaVita, carrying a Zacks Rank of 2, reported second-quarter 2024 adjusted EPS of $2.59, beating the Zacks Consensus Estimate by 4.9%. Revenues of $3.19 billion outpaced the consensus mark by 0.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DaVita has a long-term estimated growth rate of 17.5%. DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 24.2%.

Quest Diagnostics reported second-quarter 2024 adjusted EPS of $2.35, beating the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion surpassed the Zacks Consensus Estimate by 0.5%. It currently carries a Zacks Rank #2.

Quest Diagnostics has a long-term estimated growth rate of 6.2%. DGX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.

Boston Scientific reported second-quarter 2024 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 6.9%. Revenues of $4.12 billion surpassed the Zacks Consensus Estimate by 2.5%. It currently carries a Zacks Rank #2.

Boston Scientific has a long-term estimated growth rate of 12.6%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.

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