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Cooper Companies (COO) to Post Q2 Earnings: What's in Store?

Zacks Equity Research

The Cooper Companies, Inc.’s COO second-quarter fiscal 2020 results are scheduled to release on Jun 4, after the closing bell.

In the last reported quarter, the company reported a negative earnings surprise of 0.7%.

Fiscal Q2 Estimates

For the fiscal second quarter, the Zacks Consensus Estimate for revenues is pegged at $632.5 million, suggesting a decline of 3.3% from the year-ago quarter. The same for earnings stands at $2.63 per share, indicating a fall of 10.5% from the prior-year reported figure.

Factors to Note

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

Better-than-expected performance across the Americas, Asia-Pacific and EMEA might get reflected in the company’s CVI segment’s fiscal second-quarter revenues. Further, accelerating growth in both Clariti and MyDay, and higher revenues from Single-use sphere lenses is likely to have contributed to the to-be-reported quarter’s revenues.

In fact, it is encouraging to note that for fiscal 2020, the company anticipates CVI sales of $2.07-$2.10billion, indicating growth of 5.5-7% at constant currency (cc).

The Cooper Companies, Inc. Price and EPS Surprise

 

The Cooper Companies, Inc. Price and EPS Surprise

The Cooper Companies, Inc. price-eps-surprise | The Cooper Companies, Inc. Quote

Additionally, CVI’s Toric and Multifocal lenses, which make Cooper Companies a dominant force in the soft contact lenses market, are likely to have driven the fiscal second-quarter results.

In November 2019, Cooper Companies announced the FDA approval of its MiSight 1-day contact lens, indicated to slow the progression of myopia when initially prescribed for children aged 8-12 years. This might have positively impacted CVI’s performance in the to-be-reported quarter.

Management at Cooper Companies anticipates witnessing higher contact lenses demand, courtesy of the global transition to daily contact lenses by customers. Moreover, the company has made advancements in customized product offerings, which are likely to have ramped up the fiscal second-quarter sales.

The company’s CSI segment is likely to report revenue growth in the to-be-reported quarter backed by strength in Cooper’s device portfolio, which includes consumable products including IVF media and the market-leading Wallace Embryo needles and transfer catheters.

It is encouraging to note that for fiscal 2020, Cooper Companies expects CSI sales of $697-$717 million, suggesting growth of 3-6% at cc on a year-over-year basis.
For fiscal 2020, the company expects mid-single digit growth from the PARAGARD acquisition, a trend that is likely to reflect in the to-be-reported quarter.

It is important to note here that Cooper Companies generates significant part of revenues in foreign currencies. Consequently, adverse forex might have affected the company’s overseas revenues.

Notably, Cooper Companies anticipates foreign exchange headwinds to have an impact of $11 million on revenues in fiscal 2020.

Further, per management, a negative impact of around $15 million on revenues due to coronavirus is expected in the fiscal second quarter.

What Our Quantitative Model Suggests

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here as you will see below.

Earnings ESP: Cooper Companies has an Earnings ESP of -18.13%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #3.

Peer Releases

Some better-ranked stocks in the broader medical space that have already announced their quarterly results includeAphria Inc. APHA, Biogen Inc. BIIB and Eli Lilly and Company LLY.

Aphria reported third-quarter fiscal 2020 adjusted EPS of 2 cents, beating the Zacks Consensus Estimate of a loss of 4 cents. Net revenues of $64.4 million surpassed the consensus mark by 14.6%. The company carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Biogen currently carries a Zacks Rank #2. It reported first-quarter 2020 adjusted EPS of $9.14, surpassing the Zacks Consensus Estimate by 18.1%. Revenues of $3.53 billion outpaced the consensus mark by 3.2%.

Eli Lilly reported first-quarter 2020 EPS of $1.75, outpacing the Zacks Consensus Estimate by 12.9%. Revenues of $145.3 million surpassed the consensus estimate by 6.3%. The company currently sports a Zacks Rank #1.

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