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Cooper Companies' (COO) Q1 Earnings Beat, Revenues Rise Y/Y

Zacks Equity Research

The Cooper Companies, Inc. COO reported first-quarter fiscal 2019 adjusted earnings of $2.88 per share, which surpassed the Zacks Consensus Estimate of $2.51. The bottom line also increased 3% on a year-over-year basis.

Revenues came in at $628.1 million, outpacing the Zacks Consensus Estimate of $618 million. On a year-over-year basis, the top line improved 6.5%.

This California-based specialty medical device company currently carries a Zacks Rank #3 (Hold).

The Cooper Companies, Inc. Price and Consensus

The Cooper Companies, Inc. Price and Consensus | The Cooper Companies, Inc. Quote

Q4 Segment Details

CooperVision (CVI)

This segment garnered revenues worth $470.1 million, up 8% on a pro-forma basis and 6% on a reported basis.

Per management, the segment saw a noticeable uptick in the Single-use sphere lenses (28% of CVI), reflecting pro-forma growth of 17% driven by accelerating growth in both Clariti and MyDay. Single-use sphere lenses revenues totaled $132.1 million.

Toric (31% of CVI) revenues totaled $146 million, up 9% on a pro-forma basis.

Multifocal (10% of CVI) generated revenues worth $49.1 million, up 8% at pro forma and 5% year over year.

Non single-usesphere (30% of CVI) revenues came in at $142.9 million, up 1% at pro forma and down 1% from a year ago.

Geographically, the segment witnessed an improvement in revenues in the Americas (38% of CVI), up 4% at pro forma and 4% year over year to $176 million.

The EMEA revenues (39% of CVI) totaled $184.3 million, up 9% at pro forma and 4% from the prior-year quarter tally. Per management, overseas growth was driven by clariti and MyDay strength, and solid results from Biofinity and Avaira Vitality.

Asia Pacific sales (23% of CVI) rose 13% at pro forma and 12% year over year to $109.8 million.

CooperSurgical (CSI)

This segment posted revenues of $158 million, up 8% at pro forma and 9% year over year. Per management, the upside can be attributed to a 20% rise in PARAGARD.

Sub-segment Office and Surgical products (61% of CSI) accounted for $95.7 million revenues, up 7% at pro forma and 9% on a year-over-year basis.

Fertility (39% of CSI) posted revenues worth $62.3 million, up 9% year over year and 8% at pro forma.

Margin Analysis

In the fiscal first quarter, gross profit totaled $418.5 million, up 12.8% year over year.  Gross margin was 67% of net revenues, up 400 basis points (bps) year over year.

On an adjusted basis, gross margin was 67%, down 100 bps year over year. The gross margin contraction was due to currency headwinds, partially offset by favorable product mix.

Adjusted operating income in the quarter summed $147.5 million, up 16.9% year over year. Adjusted operating margin was 23.5%, up 210 bps from the prior-year quarter. The company stated that the adjusted operating margin was 26% compared with 28% in the year-ago quarter. Company-wide investments in selling and marketing were the primary reason behind the downturn.

FY19 Guidance

Cooper Companies raised its fiscal 2019 guidance. The company expects adjusted revenues in the $2.63-$2.68 billion band compared with $2.60-$2.66 billion projected earlier. The mid-point of the current range of $2.65 billion beats the Zacks Consensus Estimate of $2.64 billion. This represents year-over-year growth in the band of 6-7% on a pro-forma basis.

Cooper Companies expects adjusted earnings per share in the $11.85-$12.15 band compared with the previous guidance of $11.30-$11.70. The mid-point of $12 beats the Zacks Consensus Estimate of $11.56.

Notably, revenues from CVI are expected between $1,968 and $$1,995 million, higher than $1,940 million and $1,980 million anticipated earlier. This represents year-over-year growth in the 3-6% band on a pro-forma basis.

Revenues from CSI are anticipated within $663-$681 million, up from the previous guidance of $660-$680 million.

Wrapping Up

Cooper Companies exited the fiscal first quarter on a strong note, wherein earnings and revenues outpaced the Zacks Consensus Estimate. Also, the company saw solid gains from its core CVI unit, which performed impressively in the United States, the EMEA and the Asia Pacific.

These apart, Cooper Companies continues to gain from the PARAGARD acquisition, which has been consistently driving CSI’s performance. Management is also optimistic about the Clarity, MyDay and Biofinity suite of products. The company’s portfolio of daily silicone hydrogel lenses makes it one of the stalwarts in the soft contact lens market. In the fiscal first quarter, the company paid down its debt significantly.

On the flip side, Cooper Companies’ soft genomics business in recent past is concerning. Gross margin at CVI unit was below management’s expectations. Also, foreign exchange volatility persists in the quarter under review. Moreover, a series of acquisitions pose significant integration risks. Stiff competition in the MedTech space adds to the woes.

Earnings of MedTech Majors at a Glance

Some better-ranked MedTech stocks that delivered solid results in the respective quarters are Varian Medical Systems VAR, AngioDynamics ANGO and CONMED Corporation CNMD.

Varian reported fiscal first-quarter 2019 adjusted earnings per share (EPS) of $1.06, in line with the Zacks Consensus Estimate. Revenues of $741 million outpaced the consensus mark of $717.9 million. The stock has a Zacks Rank #2 (Buy).

AngioDynamics’ fiscal second-quarter 2019 adjusted EPS of 22 cents exceeded the Zacks Consensus Estimate by a penny. Revenues totaled $91.5 million, which surpassed the consensus estimate by 2.9%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .

CONMED delivered fourth-quarter 2018 adjusted EPS of 73 cents, in line with the Zacks Consensus Estimate. Revenues of $242.4 million outshined the Zacks Consensus Estimate of $229.2 million. The stock carries a Zacks Rank of 2.

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