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Can CVI Segment Drive Cooper Companies' (COO) Q4 Earnings?

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The Cooper Companies’ (COO - Free Report) fiscal fourth-quarter 2018 results are scheduled to release on Dec 6, after market close.

A favorable show by the core CooperVision (CVI) business unit is likely to drive quarterly results. A positive guidance is encouraging.

Q3 Results at a Glance

In the last reported quarter, Cooper Companies reported adjusted earnings of $3.00 per share, missing the Zacks Consensus Estimate by 2.6%. The company reported revenues of $660 million, surpassing the Zacks Consensus Estimate of $653.4 million.

Notably, Cooper Companies pulled off a positive average earnings surprise of 2.4% in the trailing four quarters.

Which Way Are Q4 Estimates Trending?

For the quarter to be reported, the Zacks Consensus Estimate for revenues is pegged at $645.9 million, reflecting year-over-year growth of 15%. The same for earnings is pegged at $2.96, showing year-over-year growth of 11.7%.

Let’s delver deeper.

CVI Likely to Drive Q4

Cooper Companies’ CVI segment is expected to be the key driver of results in the quarter to be reported. The segment is likely to gain from the silicone hydrogel lenses, MyDay, Clariti and Biofinity platforms.

Note that the CVI segment was a significant contributor to Cooper Companies’ revenues in the last reported quarter, accounting for 74.1% of the top line.

Like the fiscal third quarter, CVI is expected to delivered solid gains in the United States, EMEA and APAC regions. Management expects the U.S. momentum to continue in the quarter to be reported. In fact, the Zacks Consensus Estimate for the CVI segment’s revenues stands at $473 million, up 7.7% from the year-ago quarter.

Coming to the sub-segments within CVI, the Zacks Consensus Estimate for Non-Single-Use Sphere lenses is pegged at $147 million, up 5.8% year over year. The same for Single-Use Sphere lenses is pegged at $131 million, up 10.1% year over year.

Meanwhile, Cooper Companies’ Specialty lenses portfolio is also likely to witness solid growth in the quarter to be reported. The Zacks Consensus Estimate for Cooper Companies’ Specialty-Multifocal lenses revenues stands at $47.8 million, showing a rise of 6% year over year. The same for Toric lenses is pegged at $146 million, reflecting 7.4% improvement on a year-over-year basis.

Other Factors at Play

CooperSurgical Unit

The Cooper Companies is well positioned to benefit from the expanding CooperSurgical (CSI) segment. CSI is likely to gain from strong growth in sales in medical devices and surgical instruments. In the last reported quarter, the segment contributed 25.9% to Cooper Companies’ net revenues. For the quarter to be reported, the Zacks Consensus Estimate for the segment’s revenues is pegged at $171 million, up an impressive 39% from the prior-year quarter.

Coming to the sub-segments within CSI, Fertility accounted for 39% of CSI revenues in the last reported quarter. For the quarter to be reported, the Zacks Consensus Estimate for revenues stands at $66 million, down 1.5% year over year.

The Zacks Consensus Estimate for the Office and Surgical Products revenues is $106 million, up a whopping 89.2% year over year.

Q4 Guidance Strong

For the fiscal fourth quarter, revenues are expected within $634-$649 million, reflecting 6% to 9% growth on a pro forma basis. CVI revenues are expected within $468-$477 million, showing pro-forma growth of 8% to 10%. The same for CSI is expected in the range of $166-$172 million, reflecting pro-forma growth of 3% to 6%. Adjusted earnings per share for the quarter are projected between $2.90 and $3.00.

What Does Our Model Predict?

Our quantitative model indicates a positive earnings surprise for Cooper Companies. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. This is exactly the case here.

Earnings ESP:The Earnings ESP for Cooper Companies is +2.26%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank:Cooper Companies carries a Zacks Rank #3.

Other Stocks With a Favorable Combination

Here are three stocks, which per our model, also have the right combination of elements to post earnings beat this quarter:

lululemon athletica inc. (LULU - Free Report) has an Earnings ESP of +1.87% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Science Applications International Corp. (SAIC - Free Report) has an Earnings ESP of +0.44% and carries a Zacks Rank of 3.

Caseys General Stores, Inc. (CASY - Free Report) has an Earnings ESP of +6.17% and a Zacks Rank #2.

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