The Cooper Companies Inc. (COO), a company focused on contact lens and women’s health, recently revealed that CooperVision had reached an agreement to divest Aime. This Aime unit runs a contact lens operation in Japan. It will be sold to Nippon Contact Lens Inc. The company did not reveal the terms of the sale.
Aime is a manufacturer of rigid lenses. Cooper stated that the decision to divest it was in line with its policy to focus on soft contact lenses. Furthermore, Aime had shrinking sales and its margin was on the lower side. Aime had revenues of $32.9 million in fiscal 2012.
The sale of the Aime unit is expected to culminate in Cooper’s fiscal fourth quarter 2013. The company anticipates that the sale will adversely affect its fiscal 2013 reported earnings per share by 25 cents to 35 cents.
Cooper, a global company, specializes in a wide range of contact lenses for the vision correction market with a smaller strategic business unit for women’s health. It holds a leading position in the global contact lens industry.
The outlook for the contact lens industry is favorable. 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 sharply increases per user sales and profit. Trade up to the company’s flagship Biofinity silicone hydrogel offering has been a success.
Cooper is a leader in the high-margin toric lens market. It offers multiple designs of toric lenses across a wide range of parameters, unlike some of its competitors, who offer toric lenses in a limited number of designs.
However, Cooper faces formidable competition in each of its major product lines. Competition comes from well established global contact lens makers. Depressed levels of consumer spending have heightened the company’s competitive pressures.
The stock currently carries a Zacks Rank #2 (Buy). We are also positive about Becton, Dickinson and Company (BDX), Conmed Corporation (CNMD) and Steris Corp. (STE) each of which carries a Zacks Rank #2 (Buy) and are expected to do well.
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