We downgrade our recommendation on
The Cooper Companies
) to Neutral following its fiscal fourth quarter (ended October
31) results. Its fourth-quarter fiscal 2012 adjusted earnings per
share rose 0.7% year over year to a record high of $1.47.
However, it missed the Zacks Consensus Estimate of $1.53.
Revenues in the fourth quarter increased 10% (up 7% in
constant currency, barring acquisitions) year over year to $396.3
million, falling short of the Zacks Consensus Estimate of $398
million. Growth was led by robust sales of offerings from
CooperSurgical (CSI), higher revenues from CooperVision (CVI),
acquisition synergies and newer products.
Revenues from Cooper's mainstay contact lens division (80.3%
of company-wide revenues), CVI edged up 5% (up 7% in constant
currency) year over year at $318.1 million. Sales were higher for
all categories of lenses. On a material based analysis, sales of
silicone hydrogel contact lenses were up sharply 24% in constant
currency to $124 million while Proclear contact lens sales edged
up 4% to $80.4 million.
The smaller women's health segment (19.7% of company-wide
revenues) CSI performed well with revenues soaring 37% year over
year (up 2% barring acquisitions) to $78.2 million. Cooper
witnessed mixed contributions from operating units under its CSI
Cooper, a global medical products company, specializes in a
wide range of contact lenses for the vision correction market
with a smaller strategic business unit for women's health. It
reportedly holds the number three position in the $6 billion
global contact lens industry.
The company is a leader in the high-margin toric lens market.
It offers multiple designs of toric lenses, across a wide range
of parameters, unlike some of its competitors, who offer toric
lenses in a limited number of designs. Cooper is benefiting from
strong demand for its toric lenses.
However, Cooper faces formidable competition in each of its
major product lines. Competition comes from well established
global contact lens makers such as
Johnson & Johnson
). Depressed levels of consumer spending have heightened the
company's competitive pressures. The stock currently retains a
Zacks #2 Rank, which translates into a short-term "Buy"
COOPER COS (COO): Free Stock Analysis Report
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