Reasons to Retain The Cooper Companies Stock in Your Portfolio Now

The Cooper Companies (COO) is expected to grow, driven by its CooperVision and CooperSurgical segments, with revenue growth in Q1 2025 driven by silicone hydrogel lenses and fertility products; the contact lens market is expected to grow 5-7% in 2025. MiSight sales were up 27% and are expected to continue growing. However, unfavorable currency movements and rising costs are weighing on the company, and shares have underperformed the industry year-to-date.

Analysis

The Cooper Companies (COO), despite its shares declining 12.8% year-to-date and underperforming both its industry (-0.8%) and the S&P 500 Index (-0.3%), demonstrates robust underlying growth prospects within its CooperVision (CVI) and CooperSurgical (CSI) business segments. The CVI segment, a market leader in specialty contact lenses, reported a 4% constant currency revenue increase to $646.1 million in fiscal Q1 2025, fueled by strong demand for its silicone hydrogel lenses like MyDay and Clariti. Management projects CVI revenues to grow organically by over 7% for the next three years, with the overall contact lens market expected to expand 5-7% in 2025. A significant contributor is the myopia management portfolio, which saw 20% sales growth in Q1, with MiSight lens sales surging 27% and an anticipated 40% growth in the Americas and EMEA for fiscal 2025. The CSI segment also showed positive momentum, with Q1 revenues increasing 3% year-over-year to $318.6 million, driven by a 3% organic growth in its fertility business and a 4% rise in office and surgical product revenues. The company expects the CSI market to grow 5-10% long-term. However, COO's performance is tempered by headwinds from unfavorable foreign currency movements, which impact its significant overseas revenues, and rising costs affecting margins. While COO's earnings beat estimates in three of the trailing four quarters, with an average surprise of 2.698%, and a 10% bottom-line improvement is forecast over the next five years, the Zacks Consensus Estimate for fiscal 2025 revenue is $4.12 billion (+5.7% YoY) and adjusted EPS is $3.98 (+7.9% YoY), with these estimates remaining stable in the past 30 days. The stock currently carries a Zacks Rank #3 (Hold).

Key Decisions for Investors

• Investors should closely monitor the sustained growth momentum in the CooperVision segment, particularly MiSight sales which grew 27% in Q1 fiscal 2025, and the CooperSurgical division's fertility business, as strong performance in these areas is critical to potentially reverse the stock's 12.8% year-to-date decline.
• Given that a significant portion of revenue is generated in foreign currencies, the impact of exchange rate fluctuations on reported earnings and margins should be a primary focus, alongside scrutinizing the company’s strategies for mitigating rising operational costs.
• Considering the Zacks Rank #3 (Hold) and the contrast between positive segment performance (CVI Q1 revenue +4% constant currency, CSI Q1 revenue +3% YoY) and current share price weakness, existing investors may find it prudent to hold, while prospective investors should evaluate if the projected 10% five-year bottom-line growth adequately compensates for the identified currency and cost headwinds.