On Sep 6, we issued an updated research report on Pleasanton, CA-based The Cooper Companies (COO - Free Report) .
Shares of Cooper have outperformed the industry year to date. The shares of the company have increased 37.9% compared with the industry’s gain of 15.3%.
Additionally, the company’s earnings estimates have moved north in the current year, reflecting analyst optimism. Over the past month, current and next quarter earnings estimates have increased 1.1% and 1.8%, respectively. Moreover, Cooper reported earnings which have surpassed the Zacks Consensus Estimate in the trailing four quarters with an average surprise of 4.8%.
The company’s leading position in the market of specialty lenses was also supported by highly exclusive products of Biofinity and Clariti. In fact, its flagship silicone hydrogel lenses are expected to deliver strong sales in the coming quarters. The company has also initiated the process of introducing MyDay lenses in the domestic market. It is already available in Europe and has gained significant traction within a short span of time. Clariti lenses hold significant growth prospects for the company.
The outlook for the contact lens industry is favorable. A fall in dropout rate of contact lens users and further market penetration, especially in developing nations, is expected with continuous improvisation in the technology. Growth in international markets is something that contact lens manufacturers are banking on. Furthermore, user preferences are shifting from low-feature commodity lenses to expensive single-use and specialty lenses such as lenses with aspherical optical properties or higher oxygen permeable lenses (silicone hydrogels).
We believe that Cooper is well positioned to address this shift in customer preferences based on its expansive product portfolio. The company recently introduced Biofinity Energys’ contact lenses, which is targeted at group of users who frequently complain about the discomfort arising from prolonged usage of smartphones, tablets, laptops, in-car displays and other devices. The company is a leader in the high-margin toric lens market. It offers multiple designs of toric lenses across a wide range of parameters, unlike some of its competitors, who offer the same lenses in limited designs. This is expected to further boost the company’s top-line growth going forward.
On the flip side, macroeconomic concerns in several international markets might spell trouble for the company. Additionally, the slowdown in the Chinese economy might continue to dent discretionary spending. Also given its significant international presence, Cooper remains highly vulnerable to fluctuations in exchange rates.
Zacks Rank & Key Picks
Cooper carries a Zacks Rank #3 (Hold).
A few better-ranked medical stocks are Edwards Lifesciences Corporation (EW - Free Report) , Lantheus Holdings, Inc. (LNTH - Free Report) and IDEXX Laboratories, Inc. (IDXX - Free Report) . Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), while Lantheus Holdings and IDEXX Laboratories carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has surged roughly 25.9% over the last six months.
Lantheus Holdings has a long-term expected earnings growth rate of 12.5%. The stock has rallied 25.8% over the last six months.
IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock has gained around 5.4% over the last six months.
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