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

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The Cooper Companies, Inc. (COO - Free Report) is well poised for growth on the back of strong segmental performances, increasing penetration in international markets and solid gains from its core CooperVision (CVI) unit.

The stock carries a Zacks Rank #3 (Hold).

Price Performance

Shares of Cooper Companies have gained 15.1%, outperforming the industry’s growth of 12% on a year-to-date basis. The stock also outpaced the S&P 500 Index’s rally of 13.4%.



What’s Favoring the Stock?

Driven by highly exclusive product portfolio featuring the likes of Biofinity and Clariti, Cooper Companies has been able to maintain its leading position in specialty lenses markets. Notably, the company’s flagship silicone hydrogel lenses are anticipated to generate strong sales in the near term. We expect its MyDay and Clariti lenses to further strengthen and bolster growth prospects.

Moreover, the company’s CooperVision segment has been successful globally and is fortifying foothold through developments such as Eye care professional (ECP) programs in Australia and New Zealand.

This apart, the aforementioned segment remains focused on multiple initiatives that will increase the adoption of its innovative MiSight 1-day product across major world markets.

For fiscal 2019, management expects revenues at CooperSurgical (CSI) to grow 3-6% at pro forma.

With respect to CSI, its expanding product portfolio has been benefiting the segment consistently. Recently, the company inked a deal to purchase the flagship contraception platform of Israel-based Teva Pharmaceutical Industries (TEVA) — PARAGARD Intrauterine Device. The transaction is expected to bolster Cooper Companies’ CSI business in the global contraceptive device market.

Notably, revenues from CSI are anticipated within the range of $663 million to $681 million, up from the previous guidance of $660-$680 million.

Strategic acquisitions play an important role with respect to company’s long-term growth prospects. CSI’s acquisition of Incisive Surgical and CVI’s buyout of Blanchard contact lenses are expected to prove beneficial for the respective segments, which in turn will fuel growth.

What’s Deterring the Stock?

The company faces intense competition due to the highly competitive contact lens industry it operates in. This in turn will continue to increase pricing pressure.

Further, Cooper Companies generates a substantial portion of revenues in foreign currencies and consequently, fluctuations in the same can adversely affect its overseas revenues. In fact, the company anticipates foreign-exchange headwinds of 47 cents per share in 2019.

Which Way Are Estimates Headed?

For fiscal 2019, the Zacks Consensus Estimate for revenues is pegged at $2.66 billion, indicating an improvement of 4.9% from the year-ago quarter. The same for earnings stands at $12.01, suggesting growth of 4.4% from the year-ago reported figure.

Key Picks

Some better-ranked stocks from the broader medical space are Cardiovascular Systems, Inc. , Quidel Corporation (QDEL - Free Report) and Heamonetics Corporation (HAE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cardiovascular Systems has earnings growth rate for fiscal fourth quarter of 2019 of 33.3%.

Quidel Corporation has a long-term earnings growth rate of 25%.

Heamonetics has a long-term earnings growth rate 13.5%.

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