The Cooper Companies, Inc.
COO is well poised for growth on the back of strong segmental performances, increasing penetration in international markets and solid gains from core CooperVision (CVI) unit.
The stock carries a Zacks Rank #2 (Buy).
Shares of Cooper Companies have gained 30.9%, outperforming the industry’s growth of 12.2% on a year-to-date basis. Moreover, the stock outpaced the S&P 500 Index’s rally of 13.7%.
What’s Favoring the Stock?
Driven by a highly exclusive product portfolio featuring the likes of Biofinity and Clariti, Cooper Companies has been able to maintain its leading position in specialty lenses markets. Notably, the company’s flagship silicone hydrogel lenses are anticipated to generate strong sales in the near term. We expect the company’s MyDay and Clariti lenses to strengthen and bolster growth prospects further.
Moreover, the company’s CooperVision segment has been successful globally and is fortifying presence through developments such as Eye care professional (ECP) programs in Australia and New Zealand.
This apart, the aforementioned segment remains focused on multiple initiatives that will increase the adoption of its innovative MiSight 1 day product across major world markets.
For fiscal 2019, management expects revenues at CVI to grow 7-8% at pro forma.
With respect to CooperSurgical (CSI), its expanding product portfolio has been benefiting the segment consistently. Recently, the company inked a deal to purchase the flagship contraception platform of Israel-based Teva Pharmaceutical Industries (TEVA) — PARAGARD Intrauterine Device. The transaction is expected to bolster Cooper Companies’ CooperSurgical (CSI) business in the global contraceptive device market.
Notably, revenues from CSI are anticipated within the range of $669 million to $682 million, up from the previous guidance of $663-$681 million.
Strategic acquisitions play an important role with respect to company’s long-term growth prospects. CSI’s acquisition of Incisive Surgical and CVI’s buyout of Blanchard contact lenses are expected to prove beneficial for the respective segments, which in turn will fuel growth.
An upgraded fiscal 2019 guidance is also favoring the stock. Currently, the company expects adjusted revenues in the $2.63-$2.67 billion band compared with $2.63-$2.68 billion projected earlier. Cooper Companies expects adjusted earnings per share in the $12.15-$12.35 band compared with the previous guidance of $11.85-$12.15.
Which Way Are Estimates Headed?
For fiscal 2019, the Zacks Consensus Estimate for revenues is pegged at $2.65 billion, reflecting year-over-year improvement of 4.7%. The same for earnings stands at $12.27, exhibiting year-over-year growth of 6.7%.
Other Key Picks
Some other top-ranked stocks from the broader medical space are Allscripts Healthcare Solutions, Inc. MDRX, INC Research Holdings, Inc. SYNH and HMS Holdings Corp. HMSY, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Allscripts Healthcare has a long-term earnings growth rate of 10.3%.
INC Research Holdings has a long-term earnings growth rate of 10.5%.
HMS Holdings has a long-term earnings growth rate 11%.
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