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The Cooper Companies Upped to Buy

Zacks Equity Research

On Mar 19, Zacks Investment Research upgraded The Cooper Companies Inc. (COO) to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold).

Why the Upgrade?

The Cooper Companies has been enjoying rising earnings estimates in the last one month, riding on strong fiscal 2014 first-quarter results and a promising guidance for fiscal 2014. Moreover, this global medical device company has delivered positive earnings surprises in 3 of the last 4 quarters.

Following the earnings release on Mar 6, shares of The Cooper Companies climbed 5.1% to $137.62 till the last closing date.
The Cooper Companies posted adjusted earnings of $1.47 per share for the quarter, exceeding the year-ago level of $1.23 by 19.5% and the Zacks Consensus Estimate by 2 cents per share. Revenues in the quarter grew 7% to $405.0 million, edging past the Zacks Consensus Estimate by $5.0 million.

Furthermore, the company reported an improvement of 200 basis points each in the gross and operating margins for the quarter. Gross margin was positively impacted by a lower royalty payment on silicone hydrogel lens sales and favorable product mix, whereas the increase in operating margin was driven by higher gross margin and a decline in selling, general & administrative expenses as a percentage of sales (39.0% in first-quarter 2014 from 39.7% in first-quarter 2013).

The Cooper Companies revised its fiscal 2014 total revenue guidance to the range of $1,685–$1,725 million compared with the prior guidance of $1,675–$1,735 million. The revised revenue guidance represents an increase of 6.1–8.6% from fiscal 2013.

Both reported and adjusted earnings per share for the year are expected in the range of $6.75–$7.00 compared with the earlier guided range of $6.70–$7.00. The revised earnings guidance indicates a rise of 13.4–17.6% from fiscal 2013.

Over the last 30 days, The Cooper Companies saw five upward estimate revisions for fiscal 2014 with no downward revision over the same time frame, thus, leading to a 0.6% rise in the Zacks Consensus Estimate to $6.86 per share.

The long-term expected earnings growth for this stock is pegged higher at 14.3% compared with industry growth of 13.5%.  

Other Stocks to Consider  

Some other stocks worth reckoning in the medical/dental supply industry include Align Technology Inc. (ALGN), CR Bard Inc. (BCR), and Becton, Dickinson and Company (BDX). All the three stocks hold a similar Zacks Rank #2.

Read the Full Research Report on BCR
Read the Full Research Report on ALGN
Read the Full Research Report on BDX
Read the Full Research Report on COO

Zacks Investment Research