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Reasons to Retain The Cooper Companies (COO) in Your Portfolio Now
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The Cooper Companies, Inc. (COO) 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 currently Zacks Rank #3 (Hold) company have risen 7.8% in the past year compared with the industry's 11.7% growth. The S&P 500 Index has gained 24.4% in the same time frame.
The Cooper Companies, with a market capitalization of $18.02 billion, is a specialty medical device company operating on a global basis.
The company’s bottom line is estimated to improve 10.9% over the next five years. Its earnings beat estimates in two of the trailing four quarters and met twice, delivering an average surprise of 2.84%.
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 fourth quarter of fiscal 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 quarter.
The CVI segment displayed solid performance in the same period, with its revenues rising 9% at a constant exchange rate and to $622.9 million on an organic basis. Per management, strong demand for silicone hydrogel lenses contributed to the segmental uptick.
CVI revenues are likely to be in the $2.548-$2.594 billion range (organic growth of 7-9%) in fiscal 2024.
The Cooper Companies is well-positioned to benefit from the expanding CSI product portfolio as well. In the fiscal fourth quarter, CSI witnessed revenue growth in two key areas — fertility, and office and surgical products.
Revenues from fertility increased 12% year over year to $121.6 million, indicating sustained solid performance. Sales of office and surgical products improved 3% to $182.9 million.
For fiscal 2024, CSI revenues are expected to be in the $1.261-$1.283 billion range, implying organic growth of 4-6%.
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 the cost of sales and selling, general and administrative expenses is concerning. The contraction in operating margin during fiscal 2023 is disappointing.
Estimates Trend
The Zacks Consensus Estimate for the company's fiscal 2024 revenues is pegged at $3.85 billion, implying growth of 7.2% from the 2023 reported figure. The same for adjusted EPS is pegged at $13.82 for 2024, indicating an improvement of 7.9% from the previous year’s recorded level.
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Biodesix (BDSX - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DVA’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 36.55%. DaVita’s shares have risen 42.7% in the past year compared with the industry’s 9.6% growth.
Biodesix, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 32.3% for 2024. BDSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 9.76%.
Biodesix’s shares have lost 13.2% in the past year compared with the industry’s 3.2% decline.
Integer Holdings, holding a Zacks Rank of 2 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 43.5% in the past year against the industry’s 3.7% decline.
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Reasons to Retain The Cooper Companies (COO) in Your Portfolio Now
The Cooper Companies, Inc. (COO) 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 currently Zacks Rank #3 (Hold) company have risen 7.8% in the past year compared with the industry's 11.7% growth. The S&P 500 Index has gained 24.4% in the same time frame.
The Cooper Companies, with a market capitalization of $18.02 billion, is a specialty medical device company operating on a global basis.
The company’s bottom line is estimated to improve 10.9% over the next five years. Its earnings beat estimates in two of the trailing four quarters and met twice, delivering an average surprise of 2.84%.
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 fourth quarter of fiscal 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 quarter.
The CVI segment displayed solid performance in the same period, with its revenues rising 9% at a constant exchange rate and to $622.9 million on an organic basis. Per management, strong demand for silicone hydrogel lenses contributed to the segmental uptick.
CVI revenues are likely to be in the $2.548-$2.594 billion range (organic growth of 7-9%) in fiscal 2024.
The Cooper Companies is well-positioned to benefit from the expanding CSI product portfolio as well. In the fiscal fourth quarter, CSI witnessed revenue growth in two key areas — fertility, and office and surgical products.
Revenues from fertility increased 12% year over year to $121.6 million, indicating sustained solid performance. Sales of office and surgical products improved 3% to $182.9 million.
For fiscal 2024, CSI revenues are expected to be in the $1.261-$1.283 billion range, implying organic growth of 4-6%.
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 the cost of sales and selling, general and administrative expenses is concerning. The contraction in operating margin during fiscal 2023 is disappointing.
Estimates Trend
The Zacks Consensus Estimate for the company's fiscal 2024 revenues is pegged at $3.85 billion, implying growth of 7.2% from the 2023 reported figure. The same for adjusted EPS is pegged at $13.82 for 2024, indicating an improvement of 7.9% from the previous year’s recorded level.
The Cooper Companies, Inc. Price
The Cooper Companies, Inc. price | The Cooper Companies, Inc. Quote
Stocks to Consider
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Biodesix (BDSX - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 17.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DVA’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 36.55%. DaVita’s shares have risen 42.7% in the past year compared with the industry’s 9.6% growth.
Biodesix, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 32.3% for 2024. BDSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 9.76%.
Biodesix’s shares have lost 13.2% in the past year compared with the industry’s 3.2% decline.
Integer Holdings, holding a Zacks Rank of 2 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 43.5% in the past year against the industry’s 3.7% decline.