On Aug 27, we have updated our research report on The Cooper Companies Inc. (COO). We are encouraged by the company’s upgraded earnings guidance and stable revenues outlook for fiscal 2014. Its contact lens unit is growing at above-market growth rates.
Trade up to value added lenses, such as silicone hydrogel or one-day lenses, constitutes a major avenue for growth. A trade up to 1-day disposable lenses exponentially increases per user sales and profit. Trade up to The Cooper Companies’ flagship Biofinity silicone hydrogel offering has been a success
The Cooper Companies commands almost one-third market share in rapidly growing specialty lenses, multifocal lenses and torics. The company continues to garner market share by growing at two to three times (or about 12%) the market growth rate.
The outlook for the contact lens industry is favorable. A fall in dropout rate of contact lens wearers and further market penetration, especially in developing nations, is expected with continuous improvisation in the technology.
However, the global markets, particularly European nations, continue to be negatively affected by uncertainty. In such a situation, contact lens, being a discretionary purchase for the most part, is often deferred by cash-strapped consumers.
For fiscal 2014, The Cooper Companies expect earnings in the band of $6.78 to $7.00 compared with the earlier range of $6.75 to $7.00, while adjusted earnings are projected in the $6.80–$7.00 range compared with the prior range of $6.75 to $7.00. The current Zacks Consensus Estimate of $6.91 lies within the guided range.
COO continues to expect total revenue between $ 1,685 and $1,725 million for 2014. The current Zacks Consensus Estimate of $1,718 million lies within the guided range.
Currently, The Cooper Companies carries a Zacks Rank #2 (Buy). Other stocks that are worth a look include McKesson Corporation (MCK) in the medical/dental supplies industry, and ICU Medical, Inc. (ICUI) and Abaxis, Inc. (ABAX) in the medical products industry. ICU Medical sports a Zacks Rank #1 (Strong Buy), while both Abaxis and McKesson carry a Zacks Rank #2 (Buy).
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