Why Is Contact Lens Maker Cooper Companies Stock Trading Lower On Friday?

Cooper Companies (NASDAQ:COO) reported second-quarter adjusted earnings of 96 cents per share on Thursday, up 14% year over year, beating the consensus of 93 cents.

The medical device company reported sales of $1.00 billion, beating the consensus of $995.35 million.

Sales were up 6% from last year’s second quarter, 7% in constant currency, 7% organically.

• The CooperVision segment, focused on contact lenses, reported sales of $669.6 million, up 5% from last year’s second quarter, 7% in constant currency and 7% organically.
• CooperSurgical, focused on fertility and women’s healthcare, reported revenue of $332.7 million, up 8% from last year’s second quarter, 9% in constant currency and 7% organically.

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The gross margin is 68% compared with 67% in last year’s second quarter, driven by efficiency gains and mix. On a non-GAAP basis, the gross margin was 68%, up from 67% last year.

Operating margin of 18% compared with 17% in last year’s second quarter, driven by stronger gross margins and targeted expense leverage. On a non-GAAP basis, the operating margin was 25%, up from 24% last year.

Guidance: Cooper Companies revised its fiscal 2025 revenue guidance from $4.08 billion-$4.16 billion to $4.11 billion-$4.15 billion versus a consensus of $4.12 billion.

• The company expects 2025 organic growth of 5%-6%, down from 6%-8%.
• CooperVision revenue of $2.76 billion-$2.79 billion (organic growth of 6% to 7%), compared to prior guidance of $2.73 billion-$2.79 billion (organic growth of 6.5% to 8.5%).
• CooperSurgical revenue of $1.35 billion-$1.36 billion (organic growth of 3.5% to 4.5%) compared to prior guidance of $1.35 billion-$1.37 billion (organic growth of 4% to 6%).

Cooper Companies revised its fiscal 2025 adjusted earnings from $3.94-$4.02 to $4.05-$4.11, compared to the consensus of $3.99.

Analyst Reaction:

• William Blair writes, “In short, while the market outlook commentary is disappointing and raises some new questions, we believe the company has sufficient tailwinds to drive continued earnings outperformance.”
  • Analyst Margaret Kaczor Andrew writes that despite the in-line quarter, management lowered market growth expectations by 100 basis points at the midpoint, which is now closer to historical pre-COVID growth levels. The change is due to softer channel inventory dynamics and industry-wide changes in overall purchasing patterns.
  • William Blair maintains an Outperform rating.
• Wells Fargo maintains Cooper Companies with an Overweight, lowering the price target from $118 to $93.
• JP Morgan downgrades Cooper Companies from Overweight to Neutral and lowers the price target from $110 to $76.

Price Action: COO stock was down 14.3% at $68.50 at the last check on Friday.

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