The Cooper Companies, Inc.
Analysis
Cooper has become a reliable earnings and cash machine while the revenue growth it keeps promising keeps sliding to the right. With no sale of CooperSurgical coming, that gap now has to close from selling more contact lenses. Which quarter does management expect CooperVision to grow in line with the market?
- Earnings and cash keep compounding while revenue stalls.
An 11th straight quarter of beating earnings expectations and record free cash flow of $273 million. Vision revenue was still flat, and management says the whole cut to guidance is US channel inventory, with demand still growing. How much of the US channel inventory was cleared in Q3, and how much remains?
- Management finally blamed sales execution, not the products.
Al White's own words: "we don't have enough salespeople on the street." Contracts are won and the portfolio is the strongest it has ever been, but the orders are not converting. More reps will not show up in sales until late 2027. How many sales reps is Cooper adding, and when do they start selling?
- The strategic review ended with no CooperSurgical sale.
The board chose to keep the business, saying the bids did not reflect its value once a new non-hormonal IUD rival appeared and the fertility litigation settled. With no sale, the unlock must come from buybacks and organic growth.
- Premium lens and myopia portfolioCooperVision's premium daily lenses and myopia control products keep taking share and earn more revenue per patient than the older lenses they replace.
- Fertility cycle recoveryCooperSurgical's fertility business is recovering as clinic treatment cycles improve, and capital equipment and genomics sales are winning new accounts.
- Cash generation and buybacksStrong free cash flow and a larger buyback authorization let management return capital and still fund the sales and marketing investment CooperVision needs.
- CooperVision forecast reductionsThe bear case is that CooperVision's shortfall is self-inflicted: management has repeatedly cut its growth forecast and now names its own sales coverage as the constraint.
- Asia Pacific demand softnessWeak consumer spending in Japan and China and a shift to online purchasing are delaying the Asia Pacific recovery that management expected to be over by now.
- Super premium product gapCooper sells no super premium daily lens, so it is absent from the part of the contact lens market that is growing fastest and paying most per patient.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Purchase | ≥$15K | Jul 20 | Sep 22 |
Donald Trump Republican · Executive | Sale | ≥$15K | May 18 | Jul 1 |
Donald Trump Republican · Executive | Purchase | ≥$1K | Mar 26 | May 13 |
Donald Trump Republican · Executive | Sale | ≥$1K | Mar 17 | May 13 |
Donald Trump Republican · Executive | Sale | ≥$100K | Feb 10 | May 13 |
Congressional trading data provided by QuiverQuant
How The Cooper Companies turned $4.1B of revenue into $682.9M of operating income.
| Revenue | ||
|---|---|---|
| Coopervision Segment | $2.7B | ▲ 5.15% YoY |
| Coopersurgical Segment | $1.3B | ▲ 4.87% YoY |
| Total revenue | $4.1B | |
| Gross profit | $2.7B | 65.5% |
| Operating income | $682.9M | 16.7% |