Cooper Companies (COO) Q3 Earnings Beat, Revenues Rise Y/Y

The Cooper Companies, Inc. COO reported third-quarter fiscal 2019 adjusted earnings per share (EPS) of $3.23, which surpassed the Zacks Consensus Estimate of $3.16. The bottom line increased 7.7% on a year-over-year basis.

Revenues of this Zacks Rank #2 (Buy) company came in at $679.4 million, missing the Zacks Consensus Estimate of $686.9 million. However, on a year-over-year basis, the top line improved 2.9%.

Q3 Segment Details

CooperVision (CVI)

This segment’s revenues totaled $509.1 million, up 6% on a pro-forma basis and 4% on a reported basis.

Per management, the segment saw a noticeable uptick in the Single-use sphere lenses (29% of CVI), reflecting pro-forma growth of 9%, driven by accelerating growth in both Clariti and MyDay. Single-use sphere lenses revenues totaled $146.3 million.

Toric (32% of CVI) revenues totaled $163.1 million, up 8% on a pro-forma basis.

Multifocal (10% of CVI) generated revenues of $52.4 million, up 2% at pro forma and down 1% year over year.

Non single-use sphere (29% of CVI) revenues came in at $147.3 million, up 9% at pro forma and 6% from the year-ago quarter.

Geographically, the segment witnessed an improvement in revenues in the Americas (38% of CVI), up 5% at pro forma and 6% year over year to $195 million.

EMEA revenues (39% of CVI) totaled $196 million, up 3% at pro forma but down 2% from the prior-year quarter.

Asia Pacific sales (23% of CVI) rose 13% at pro forma and 12% year over year to $118.1 million.

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

CooperSurgical (CSI)

This segment posted revenues of $170.3 million, up 2% at pro forma and flat year over year.

Sub-segment Office and Surgical products (62% of CSI) accounted for $106.3 million revenues, up 2% on a year-over-year basis.

Fertility (38% of CSI) revenues were $64 million, down 4% year over year but up 5% at pro forma.

Margin Analysis

In the fiscal third quarter, gross profit was $450.7 million, up 5.6% year over year.  Gross margin was 66.3% of net revenues, up 160 basis points (bps) year over year.

On an adjusted basis, gross margin was 67%, flat year over year.

Operating income in the quarter was $142.2 million, up 23% year over year. Adjusted operating margin was 28%, flat when compared to the prior-year quarter.

FY19 View Updated

For fiscal 2019, Cooper Companies expects revenues within $2,635-$2,655 million, calling for pro forma growth of 6-7%. The Zacks Consensus Estimate is pegged at $2.65 billion, the high end of the guided range.

Notably, CVI revenues are expected within $1,966-$1,976 million, reflecting 7-8% of pro forma growth. CSI revenues are projected between $669 million and $679 million, mirroring 4-6% of pro forma growth.

Adjusted EPS is expected within $12.27-$12.35. The Zacks Consensus Estimate is pinned at $12.28, within the guided range. The mid-point of $12.31 is higher than that of the previously-stated guidance of $12.15-$12.35.

For fiscal fourth quarter, revenues are projected within $674-$694 million, calling for 5-8% growth at pro forma. The Zacks Consensus Estimate stands at $684.4 million, within the guided range.

CVI revenues are expected within $503-$513 million, indicating 6-8% growth at pro forma. CSI revenues are expected between $171 million and $181 million, reflecting 1-7% growth at pro forma.

Fourth-quarter EPS is expected within $3.22-$3.30. The Zacks Consensus Estimate is pegged at $3.29, the high end of the guided range.

Wrapping Up

Cooper Companies exited the fiscal third quarter on a mixed note. The company saw solid gains from its core CVI unit, which performed impressively in the United States, the EMEA and the Asia Pacific with high pro forma growth.

Apart from these, Cooper Companies continues to gain from the PARAGARD acquisition, which has been consistently driving CSI’s performance. Management is also optimistic about the Clarity, MyDay and Biofinity suite of products. The company’s portfolio of daily silicone hydrogel lenses makes it one of the leaders in the soft contact lens market.

On the flip side, Cooper Companies’ soft Fertility sales in the quarter are a concern. EMEA revenues also fell year over year in the quarter under review. Moreover, a series of acquisitions pose significant integration risks. Stiff competition in the MedTech space adds to the woes.

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks which posted solid results this earning season are Masimo Corporation MASI, Baxter International Inc. BAX and Intuitive Surgical, Inc. ISRG, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Masimo delivered second-quarter 2019 adjusted EPS of 76 cents, beating the Zacks Consensus Estimate of 73 cents. Revenues of $229.7 million surpassed the Zacks Consensus Estimate of $223 million.

Baxter delivered second-quarter 2019 adjusted EPS of 89 cents, which surpassed the Zacks Consensus Estimate of 81 cents by 9.9%. Revenues of $2.84 billion outpaced the Zacks Consensus Estimate of $2.79 billion by 1.9%.

Intuitive Surgical reported second-quarter 2019 adjusted EPS of $3.25, which beat the Zacks Consensus Estimate of $2.85. Revenues were $1.1 billion, surpassing the Zacks Consensus Estimate of $1.03 billion.

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