Cooper Companies (COO) Q2 Earnings & Revenues Beat Estimates

The Cooper Companies, Inc. COO posted second-quarter fiscal 2018 adjusted earnings of $2.86 per share, which beat the Zacks Consensus Estimate by 1.1%. Earnings also increased 14.4% on a year-over-year basis.

The California-based specialty medical device company reported revenues worth $631.3 million, which surpassed the Zacks Consensus Estimate by 0.8%. Revenues improved 20.8% from the prior-year quarter and 5% on a pro forma basis (defined as constant exchange rate and including acquisitions in both periods).

Meanwhile, Cooper’s shares have declined 0.8% against the industry’s rise of 5.7% in the past six months.

The stock currently carries a Zacks Rank #3 (Hold).

The Cooper Companies, Inc. Price, Consensus and EPS Surprise

 

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

Segment Details

Cooper reports revenues in two major segments — CooperVision (CVI) and CooperSurgical (CSI).

CVI

This segment garnered revenues worth $467.5 million, up 14% on a year-over-year basis and 6% at cc. Per management, overall CVI sales have been driven by strong performance by the silicone hydrogel portfolio of Clariti and MyDay.

Toric (32% of CVI) revenues raked in $150.8 million, up 8% at cc, while Multifocal (10%) generated revenues worth $49.1 million, up 7% at cc.

Single-use sphere (27%) posted revenues worth $124.4 million, up 19% from the prior-year quarter. Non single-use sphere (31%) revenues came in at $143.2 million, up 10% from a year ago.

Geographically, the segment saw a strong quarter. U.S. revenues rose 7% to $183.6 million on a year-over-year basis and 6% at cc. Management expects the U.S. growth momentum to be strong in the second half on fiscal 2018, with growth expected in upper single-digits.

Revenues rose 20% on a year-over-year basis in both EMEA and Asia Pacific.

CSI

This segment posted revenues of $163.8 million, up 44% from a year ago and 3% at cc. Per management, growth was led by strength in PARAGARD and the fertility solutions product offerings.

Sub-segment Office and Surgical products (60% of CSI) accounted for $97.9 million, up a whopping 86% year over year. Fertility (40%) posted sales worth $65.9 million, up 8% year over year.

Margin Analysis

As a percentage of revenues, adjusted gross margin at the CSI segment was 71% in the reported quarter, up 900 basis points (bps) compared with the prior-year quarter.

As a percentage of revenues, adjusted gross margin at the CVI segment was 68% in the reported quarter, higher than 67% of revenues in the year-ago quarter.

In the second quarter, gross profit as a whole for Cooper Companies, totaled $431.3 million, up 25% from the year-ago quarter. Adjusted gross margin was 68.3%, which expanded 230 bps.

Operating income in the quarter totaled $180.2 million, up 28.8% from the prior-year figure. Adjusted operating margin was 28.5%, up 170 bps.

Guidance Updated

Cooper updated its revenue guidance for fiscal 2018.

The company now expects fiscal 2018 revenues within $2,515-$2,550 million compared with the previous range of $2,510-$2,560 million. Notably, the Zacks Consensus Estimate for the same is pegged at $2.53 billion, which lies within the projected range.

Revenues at the CVI segment are now estimated in the band of $1,870-$1,890 million, compared with $1,870-$1,890 million stated previously. However, CSI revenue range has been kept intact at $645-$660 million.

Fiscal 2018 adjusted earnings per share are anticipated between $11.70 and $11.90. The Zacks Consensus Estimate for earnings is pinned at $11.80, within the projected range.

In Conclusion

Cooper wrapped up fiscal second quarter on a solid note. Strong performance by CooperVision buoys optimism. Geographically as well, the company put up a solid show. The acquisition of PARAGARD drove CooperSurgical revenues. Management is optimistic about the recently-completed acquisition of LifeGlobal which is expected to enhance Cooper’s fertility business. Further, the continued improvement in gross and operating margin is promising.

On the flip side, Cooper’s long-term debt has increased significantly, which raises concern. Moreover, continued acquisitions pose integration risks. Stiff competition in the niche space adds to the woes.

Key Picks

A few better-ranked stocks in the broader medical space which have reported solid results this season are Intuitive Surgical ISRG, Chemed Corporation CHE and Baxter International Inc. BAX. While Intuitive Surgical sports a Zacks Rank #1 (Strong Buy), Chemed and Baxter carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical reported first-quarter 2018 adjusted earnings per share of $2.44, which beat the Zacks Consensus Estimate by 22.6%. Revenues totaled $848 million, also surpassing the consensus estimate by 10.6%.

Chemed posted first-quarter 2018 adjusted earnings per share of $2.72, surpassing the Zacks Consensus Estimate of $2.37. Revenues came in at $439.2 million, beating the Zacks Consensus Estimate of $420 million.

Baxter posted first-quarter 2018 adjusted earnings per share of 70 cents, which beat the Zacks Consensus Estimate by 12.9%. Revenues of $2.68 billion also edged past the Zacks Consensus Estimate of $2.62 billion.

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