Cooper Companies (COO) Hits 52-Week High On Solid Prospects

Shares of Pleasanton, CA-based The Cooper Companies (NYSE:COO) rallied to a new 52-week high of $247.80 on Jun 22, closing lower at $245.06. This represents a strong year-to-date return of approximately 26.37%, which is better than the S&P 500’s 10.83% over the same time frame.

Over the last three months, this Zacks Rank #2 (Buy) stock has considerably outperformed the Zacks categorized Medical/ Dental Supplies sub-industry. The stock rallied 22.73% over the last three months, outshining the sub-industry’s return of 18.21% over the same time frame. Notably, the stock has a market cap of $11.91 billion. Taking the stable performance of the stock into consideration, we expect The Cooper Companies to scale higher in the coming quarters. The company’s positive long-term growth of 10.75% also holds promise.

Growth Catalysts

The latest 52-week high came on the back of the company’s leading position in the markets of specialty lenses and was also supported by highly exclusive products of Biofinity and Clariti. In fact, the company’s flagship silicone hydrogel lenses are expected to deliver strong sales in the coming quarters. The company has also initiated the process of introducing MyDay lenses in the domestic market. It is already available in Europe and has gained significant traction within a short span of time. Clariti lenses also hold significant growth prospects for the company.

The outlook for the contact lens industry is favorable. A fall in dropout rate of contact lens wearers and further market penetration, especially in developing nations, is expected with continuous improvisation in the technology. Growth in international markets is something that contact lens manufacturers are banking on. Furthermore, user preferences are shifting from low-feature commodity lenses to more expensive single-use and specialty lenses, such as lenses with aspherical optical properties or higher oxygen permeable lenses (silicone hydrogels).

We believe that Cooper is well positioned to address this shift in customer preferences based on its expansive product portfolio. The company recently introduced Biofinity Energys contact lenses, which is targeted at group of users who frequently complain of discomfort arising from prolonged usage of smartphones, tablets, laptops, in-car displays and other devices. 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 the same lenses in limited designs. This is expected to further boost its top-line growth going forward.

Estimate Revision Trend

In the last two months, The Cooper Companies saw eleven estimates moving north against none moving in the opposite direction for the full year. As a result, the current-year estimates inched up 37 cents to $9.60 cents over the same time frame.

Other Key Picks

Other top-ranked stocks in the broader medical sector are Align Technology, Inc. (NASDAQ:ALGN) , Inogen, Inc. (NASDAQ:INGN) and Accelerate Diagnostics, Inc. (NASDAQ:AXDX) . While Align Technology and Inogen sport a Zacks Rank #1 (Strong Buy), Accelerate Diagnostics carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Align Technology has an expected long-term adjusted earnings growth of almost 24.1%. The stock has roughly added 34.7% over the last three months.

Inogen has a long-term expected earnings growth rate of 17.5%. The stock has roughly added 25.3% over the last three months.

Accelerate Diagnostics has an expected long-term adjusted earnings growth of 30%. The stock has roughly gained 24.5% over the last three months.

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