Strong fertility, contact-lens sales help fuel stock rally for Cooper Companies

By Tomi Kilgore

Cooper's stock heads for biggest gain in over a decade as quarterly revenue tops $1 billion for first time

Shares of Cooper Companies Inc. soared toward their best day in 13 years Thursday, after the medical-device company reported a quarterly earnings beat and raised its full-year outlook amid strength in its contact-lens and fertility businesses.

Both the San Ramon, Calif.-based company's CooperVision lens and CooperSurgical fertility and surgical businesses saw revenue rise to record levels and beat expectations, to boost its total quarterly revenue above $1 billion for the first time.

Chief Executive Al White said on an earnings call with analysts that Cooper's contact-lens sales had climbed 10% while gaining market share. The fertility business, he added, "continues to be a great business for us."

"The future is bright, as we're taking share and expanding our leadership position globally," White said, according to an AlphaSense transcript.

The company's stock (COO) ran up 11.9% in afternoon trading, enough to make it the S&P 500 index's SPX second-best performer.

It was also heading for its highest close since April 2022 and its biggest one-day gain since it shot up 16.6% on Dec. 9, 2011.

In its earnings report late Wednesday, Cooper reported net income for its fiscal third quarter ending July 31 that rose to $104.7 million, or 52 cents a share, from $85.3 million, or 43 cents a share a year earlier.

Excluding nonrecurring items, adjusted earnings per share increased to 96 cents from 84 cents, to beat the FactSet analyst consensus of 91 cents.

Net sales grew 7.8% to $1.003 billion, above the FactSet consensus of $997.3 million.

CooperVision division sales climbed 7% to $675.6 million to beat the FactSet consensus of $670.6 million, while CooperSurgical sales increased 9% to $327.2 million to top expectations of $327 million, as fertility sales were up 10%.

"[W]e're seeing strong demand in our focus markets, with fertility clinics increasing patient activity, upgrading to new technologies and opening and expanding facilities in several markets," White said.

"Regarding the broader fertility industry, the macro trends supporting growth remain intact, with the World Health Organization highlighting that one in six people globally will be affected by infertility at some point in their lives due to a variety of factors, including women delaying childbirth," White added.

For the full fiscal year, the company raised its guidance ranges for adjusted EPS to $3.64 to $3.67, from $3.54 and $3.60, and for total revenue to $3.89 billion to $3.91 billion, from $3.86 billion to $3.91 billion.

J.P. Morgan analyst Robert Marcus reiterated the overweight rating and $120 price target he's had on Cooper's stock since March, citing the company's "solid beat-and-raise" earnings report and upbeat outlook.

"Cooper has delivered solid top-line results the past several quarters, which we think should come alongside more predictable and consistent EPS results as well moving forward," he wrote in a note to clients.

The stock has gained 11.8% year to date, while the Health Care Select Sector SPDR ETF XLV has rallied 14.7% and the S&P 500 index SPX has advanced 17.7%.

-Tomi Kilgore

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08-29-24 1518ET

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