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Cooper Companies (COO) Q2 Earnings Top Estimates, '21 View Up

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The Cooper Companies, Inc. COO reported second-quarter fiscal 2021 adjusted earnings per share (“EPS”) of $3.38 which beat the Zacks Consensus Estimate by 8.3%. Moreover, the bottom line improved 123.8% on a year-over-year basis from the year-ago EPS of $1.51.

GAAP EPS in the fiscal second quarter was $2.36, reflecting a stupendous 926.1% jump from the year-ago EPS of 23 cents.

Revenue Details

For the quarter, the company’s revenues totaled $719.5 million, outpacing the Zacks Consensus Estimate by 4.2%. On a year-over-year basis, the top line improved 37.1% and 32% at constant exchange rate (CER).

Strength in segmental performances and robust recovery from pandemic-led business disruptions drove the top line.

Segment Details

Cooper Companies derives revenues from two operating segments — CooperVision (“CVI”) and CooperSurgical (“CSI”).

CVI’s revenues totaled $522.6 million, up 30% on a reported basis and 25% at CER. Per management, strength in silicone hydrogel lenses and myopia management contributed to the segmental uptick. The segment was also driven by robust sales of MiSight (152%) and orthokeratology (ortho-k) (112%) lenses.

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

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

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

Toric (33% of CVI) revenues amounted to $172.8 million, up 29% and 25% year over year on a reported basis and at CER, respectively.

Multifocal (11% of CVI) generated revenues of $58 million, up 29% and 22% compared with the prior-year period on a reported basis and at CER, respectively.

The segment saw an increase in revenues from single-use sphere lenses (28% of CVI), reflecting a year-over-year improvement of 24% and 19% on a reported basis and at CER, respectively. Single-use sphere lenses’ revenues totaled $144.5 million.

Non-single-use sphere (28% of CVI) revenues were $147.3 million, up 37% and 32% from the year-ago period on a reported basis and at CER, respectively.

Geographically, the segment witnessed an improvement in revenues in the Americas (40% of CVI), up 39% and 38% year over year on a reported basis and at CER, respectively, to $207.5 million.

EMEA revenues (37% of CVI) totaled $194.2 million, up 26% and 16% year over year on a reported basis and at CER, respectively.

Asia Pacific sales (23% of CVI) improved 23% and 19% from the year-ago period on a reported basis and at CER, respectively, to $120.9 million.

The CSI segment reported revenues of $196.9 million, up 60% and 58% from the year-ago period on a reported basis and at CER, respectively. The segment benefitted from a strong Fertility sub-segment and PARAGARD sales.

CSI’s sub-segment Office and Surgical products (57% of CSI) accounted for $112.6 million in revenues, up 62% from the year-ago period both on a reported basis and at CER.

Fertility (43% of CSI) revenues were $84.3 million, up 58% and 53% year over year on a reported basis and at CER, respectively.

Margin Analysis

In the quarter under review, Cooper Companies’ gross profit rose 50.6% to $487.1 million. Gross margin expanded 607 basis points (bps) to 67.7%.

Meanwhile, selling, general and administrative expenses rose 20.5% to $285.8 million. Research and development expenses fell 11.8% year over year to $21 million. Total operating expenses of $306.8 million increased 17.5% year over year.

Adjusted operating profit totaled $180.3 million, surging 188.5% from the prior-year quarter. Further, operating margin in the quarter expanded a huge 1315 bps to 25.1%.

Financial Position

Cooper Companies exited the second quarter of fiscal 2021 with cash and cash equivalents of $105.9 million compared with $119.1 million at the end of fiscal first-quarter 2021. Total debt (including short term) at the end of the fiscal second quarter was $1.74 billion compared with $1.81 billion at the end of fiscal first-quarter 2021.

Cumulative net cash provided by operating activities at the end of fiscal second quarter was $192.6 million compared with $25.8 million in the year-ago period.

Capital expenses incurred by the company at the end of the second quarter of fiscal 2021 were $49.9 million compared with $89.3 million in the year-ago quarter. Accordingly, free cash inflow reported by the company at the end of the fiscal second quarter was $142.7 million versus the year-ago free cash outflow of $63.5 million.

Fiscal 2021 Guidance

On the back of a strong fiscal second-quarter performance, Cooper Companies has raised its fiscal year 2021 guidance. However, the company continues to assess the scope, duration and impact of the pandemic on its results.

For fiscal 2021, the company now projects total revenues in the range of $2,855 million-$2,885 million, reflecting an uptick of 14-15% at CER (up from the previous projection of $2,800 million-$2,845 million, indicating a rise of 12-14% at CER). The Zacks Consensus Estimate for the same is currently pegged at $2.83 billion.

CVI revenues are estimated to be $2,110 million-$2,130 million, reflecting a surge of 11-12% at CER (up from the previous estimate of $2,090 million-$2,120 million, indicating growth of 9-11% at CER).

CSI revenues are expected to be $745 million-$755 million, with a 25-27% uptick at CER (up from the previous projection of $710 million-$725 million with 19-22% growth at CER).

Adjusted EPS is anticipated to be in the range of $13.20-$13.40, up from the earlier projection of $12.90-$13.10. The Zacks Consensus Estimate for the same currently stands at $13.03.

Our Take

Cooper Companies exited the fiscal second quarter with better-than-expected results. The company witnessed solid performance across both its businesses during the quarter under review, along with robust geographical performances. Roll out of clariti and the MyDay second base curve sphere lenses in Japan, and continued roll out of MyDay Toric, Biofinity Toric Multifocal and the company’s extended toric ranges for clariti and Biofinity worldwide, are impressive. Expansion in both margins bodes well. A raised financial outlook amidst continued pandemic-led challenges raises our optimism.

However, slower recovery from pandemic-led disruptions in the Asia Pacific region, including Japan, is concerning. Also, COVID-19 restrictions in several important countries like Canada, Spain, Taiwan and Singapore are posing a challenge to the company's plans of expanding its MiSight market, which is worrying.

Zacks Rank and Key Picks

Cooper Companies currently carries a Zacks Rank #3 (Hold).

A few other top-ranked stocks in the broader medical space are National Vision Holdings, Inc. EYE, Henry Schein, Inc. HSIC and Veeva Systems Inc. VEEV.

National Vision reported first-quarter 2021 adjusted EPS of 48 cents, beating the Zacks Consensus Estimate by 45.5%. Net revenues of $534.2 million outpaced the consensus estimate by 3.1%. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Henry Schein, a Zacks Rank #2 (Buy) company, reported first-quarter 2021 adjusted EPS of $1.24, beating the Zacks Consensus Estimate by 49.4%. Revenues of $2.92 billion outpaced the consensus mark by 3.6%.

Veeva Systems reported first-quarter 2021 adjusted EPS of 91 cents, surpassing the Zacks Consensus Estimate by 16.7%. Net revenues of $433.6 million outpaced the consensus estimate by 5.9%. It currently carries a Zacks Rank #2.

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