Here's Why You Should Retain Cooper Companies (COO) Stock Now
Zacks Investment Research | Oct 09, 2019 09:58PM ET
The Cooper Companies, Inc. (NYSE:COO) is well poised for growth on strong segmental performances, increasing penetration in international markets and solid gains from the core CooperVision (“CVI”) unit. However, foreign exchange-related headwinds raise concerns.
The stock currently carries a Zacks Rank #3 (Hold).
Price Performance
Shares of Cooper Companies have gained 13.5% against the industry ’s decline of 6.6% on a year-to-date basis. Meanwhile, the S&P 500 Index rallied 14.2%.
What’s Deterring the Stock?
Cooper Companies generates a significant part of revenues in foreign currencies. Fluctuations in foreign exchange rates may significantly mar its overseas revenues.
The company anticipates foreign exchange headwinds to have an adverse impact of 62 cents per share on earnings and $66 million on revenues on a year-over-year basis in 2019.
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 lens markets. Notably, the company’s flagship silicone hydrogel lenses are anticipated to generate strong sales in the near term. We expect its MyDay and Clariti lenses to bolster 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 global markets.
For fiscal 2019, management expects revenues at CVI to grow 7-8% at pro forma.
Cooper Companies has been witnessing expansion at its CooperSurgical (“CSI”) business line’s product portfolio, which has been benefiting the segment consistently. Notably, revenues from CSI are anticipated to range between $669 and $679 million.
Acquisitions play an important role in the 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 revenues to be $2,635-$2,655 million, calling for pro forma growth of 6-7%. Its adjusted earnings per share (EPS) are expected to be $12.27-$12.35.
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Which Way Are Estimates Headed?
For fiscal 2019, the Zacks Consensus Estimate for the company’s revenues is pegged at $2.65 billion, suggesting an improvement of 4.5% from the year-ago reported figure. The same for earnings stands at $12.32, indicating year-over-year growth of 7.1%.
Stocks to Consider
Some better-ranked stocks from the broader medical space are Nissan Chemical Corporation (OTC:NNCHY) , Fresenius Medical Care AG & Co. KGaA (NYSE:FMS) and McKesson Corporation (NYSE:MCK) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Nissan Chemical has a long-term earnings growth rate of 10%.
Fresenius Medical has a long-term earnings growth rate of 5.9%.
McKesson has a long-term earnings growth rate of 6.9%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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