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Cooper Companies' (COO) Buyout to Boost Women's Healthcare

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The Cooper Companies, Inc. (COO - Free Report) recently inked a definitive purchase agreement to acquire Generate Life Sciences for around $1.6 billion. The buyout is anticipated to be completed in the acquirer’s first fiscal quarter of 2022 upon the fulfillment of customary closing conditions, which include regulatory approval.

It’s worth mentioning that Generate Life Sciences is a privately held company and a leading provider of donor egg and sperm for fertility treatments, fertility cryopreservation services and newborn stem cell storage (cord blood & cord tissue).

This transaction is likely to bolster Cooper Companies’ CooperSurgical (CSI) business segment.

Rationale of the Buyout

Per management, the buyout is a strategic fit for CooperSurgical as it will enable the company to cater to the needs of fertility clinics and Ob/Gyns on the back of a more extensive product portfolio and services.

Zacks Investment ResearchImage Source: Zacks Investment Research

Given Cooper Companies’ leading position in women’s healthcare, the buyout, once completed, is going to be a crucial addition to its existing offerings. This, in turn, will enable the company to support its infrastructure and expertise, which include its sales forces’ solid clinical reputation and educational capabilities.

From the financial perspective, the acquisition (excluding one-time charges and deal-related amortization) is anticipated to be accretive to Cooper Companies’ adjusted earnings per share by around 30 cents in the first year post completion.

Market Prospects

Per a report by Grand View Research, the global women’s health market is anticipated to reach $47.8 billion by 2027, witnessing a CAGR of 4.9% during the forecast period (2016-2027). Hence, this buyout is a well-timed one for Cooper Companies.

Another Notable Development

In August, Cooper Companies announced that its CooperVision MiSight 1 day contact lenses have received approval from China’s National Medical Products Administration — regulating medical devices and pharmaceuticals — for usage within the country post a priority review. CooperVision has been leading the way (for more than a decade) when it comes to building the global myopia management category to provide aid to millions of children and their caregivers through partnership with the optometry and ophthalmology communities.

Price Performance

Shares of this Zacks Rank #4 (Sell) company have gained 14.9% on a year-to-date basis compared with the industry’s growth of 14.2%.

Stocks to Consider

Some better-ranked stocks in the broader medical space are Thermo Fisher Scientific Inc. (TMO - Free Report) , DexCom, Inc. (DXCM - Free Report) , and AngioDynamics, Inc. (ANGO - Free Report) .

Thermo Fisher’s long-term earnings growth rate is estimated at 14%. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Thermo Fisher surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.02%. The company’s earnings yield of 3.7% compares favorably with the industry’s (3.6%).

DexCom’s earnings growth rate for next quarter is estimated at 60.6%. The company currently carries a Zacks Rank #2.

DexCom surpassed earnings estimates in each of the trailing four quarters, the average surprise being 31.7%. The company’s earnings yield of 0.4% compares favorably with the industry’s (3.6%).

AngioDynamics’ consensus mark for revenues for fiscal 2022 stands at $313.3 million, suggesting an improvement of 7.7% from the prior-year reported figure. The company currently carries a Zacks Rank #2.

AngioDynamics surpassed earnings estimates in three of the trailing four quarters and missed once, the average surprise being 125.6%. The company’s earnings yield of 0.1% compares favorably with the industry’s (3.6%).