Cooper Companies Divests Lens Biz, Shares Rise - Analyst Blog

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CooperVision, Inc., a segment of the global medical device company The Cooper Companies Inc. ( COO ), revealed that effective Oct 31 its rigid gas permeable contact lens and solutions business in Japan, Aime is no longer a part of the company due to its divestment to Nippon Contact Lens Inc. at an undisclosed price following an agreement reached in May this year.

The news triggered positive investors' sentiment as the stock price elevated 1.5% to $127.60 after the market closed yesterday since the announcement on Nov 7.

COO's decision to divest the Lens business was driven by its falling revenues and lower than average margins as well as its aim to focus on soft contact lens business. Cooper Companies acquired the Aime business in 2010 as part of an acquisition that allowed the company to sell its Biofinity lens in Japan.

Due to the acquisition, COO will record a charge of 25 to 30 cents per share to its fiscal fourth quarter 2013 earnings. However, Cooper Companies expects the deal to be neutral to earnings post divestiture. Aime generated revenues of $25.3 million in fiscal 2013.

Last month, CooperVision unveiled a new contact lens brand, Biofinity XR, as an extension to its popular Biofinity (comfilcon A) silicone hydrogel technology. The lens is suitable for greater number of monthly replacement lens patients, including those who are suffering from significant hyperopia (far sightedness) and myopia (short sightedness).

Biofinity lens mitigates the problem of limited breathability of older contact lens. It is equipped with Aquaform Technology that results in more oxygen reaching the eyes, enabling clearer and whiter vision with less irritation. These lenses also retain moisture for smoothness and comfort, and maintain softness and flexibility for more comfortable wear.

CooperVision is a leading global manufacturer of monthly, two-week and single-use contact lenses. Its products are designed to mitigate vision challenges such as astigmatism, presbyopia and ocular dryness.

Cooper Companies reported earnings and revenues for the fiscal third quarter ended Jul 31, 2013, both of which surpassed the Zacks Consensus Estimates. The company's adjusted earnings of $1.74 per share exceeded the year-ago level of $1.45 by 20% as well as the Zacks Consensus Estimate by 3 cents. On a reported basis, earnings per share improved 31.6% to $1.79 from $1.36 a year ago.

Revenues in the quarter grew 8.9% to $412.0 million, ahead of the Zacks Consensus Estimate of $410 million. Thanks to the solid CooperVision (CVI) and CooperSurgical (CSI) sales during the quarter and their continued market share gains.

For fiscal 2013, COO upgraded the lower range of its revenue guidance to the range of $1,586-$1,601 million compared with the earlier guidance of $1,575-$1,605 million, comprising CVI revenues between $1,271 and $1,281 million (previously $1,260 to $1,280 million) and CSI revenues between $315 and $320 million (previously $315 to $325 million).

Cooper Companies also upgraded its reported and adjusted earnings per share guidance for the fiscal year. The company now expects reported earnings in the band of $6.57 to $6.62 compared with the earlier range of $6.42 to $6.52 and adjusted earnings in the range of $6.23 to $6.28 compared with the earlier range of $6.15 to $6.25.

Currently, COO carries a Zacks Rank #4 (Sell). The company will release its fourth quarter and full year 2013 financial results on Dec 5, 2013.

Other medical supplies stocks that are also worth a look include Align Technology Inc. ( ALGN ), McKesson Corporation ( MCK ) and Merit Medical Systems, Inc. ( MMSI ). All of them carry a Zacks Rank #1 (Strong Buy).



ALIGN TECH INC (ALGN): Free Stock Analysis Report

COOPER COS (COO): Free Stock Analysis Report

MCKESSON CORP (MCK): Free Stock Analysis Report

MERIT MEDICAL (MMSI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ALGN , COO , CSI , CVI , MCK

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