What's In Store For Cooper Companies' (COO) Q2 Earnings?

The Cooper Companies’ (NYSE:COO) second-quarter fiscal 2018 results are scheduled to release on Jun 7, after market close. While the core CooperVision (CVI) division is likely to put up a stellar performance, growth across other major segments may also act as catalysts.

In the fiscal first quarter, Cooper Companies posted strong results, with adjusted earnings of $2.79 per share beating the Zacks Consensus Estimate by 10.7% and increasing 44.6% year over year.

Moreover, revenues in the first quarter increased 4% at constant currency (cc) to $590 million, also outpacing the Zacks Consensus Estimate of $582.1 million.

Notably, for the second quarter, the Zacks Consensus Estimate for revenues is pegged at $626.6 million, reflecting year-over-year growth of 19.9%. The same for adjusted earnings per share is pinned at $2.83, showing year-over-year growth of 13.2%.

Furthermore, for the trailing four quarters, Cooper Companies has a positive earnings surprise of 6.1%.

Let’s delve deeper.

CooperVision in Focus

CooperVision manufactures and sells a wide range of contact lenses. In the last reported quarter, this segment accounted for a whopping 75.4% of Cooper Companies’ revenues. Revenues in the segment came in at $444.8 million, up 8% at cc.

Robust performance by toric (31% of CVI revenues), multifocal (11%), single-use sphere lenses (26%) and non-single-use sphere lenses (32%) drove solid growth in the segment.

Notably, for the second quarter, the Zacks Consensus Estimate for CVI revenues are pinned at $464 million which shows a year-over-year increase of 13.4%.

Multifocal revenues rose 5% year over year at cc to $46.9 million. The Zacks Consensus Estimate for second-quarter revenues is pegged at $47.4 million, reflecting a rise of 10.6% from a year ago.

Toric revenues increased 9% to $137.8 million. The consensus estimate for second-quarter revenues is pegged at $148 million, indicating a year-over-year upside of 12.1%.

Single-use sphere lenses sales climbed 11% at cc to $116.3 million. The Zacks Consensus Estimate for second-quarter revenues stands at $119 million, showing a year-over-year rise of 14.4%.

Sales of non-single-use sphere lenses rose 4% to $143.8 million. The Zacks Consensus Estimate for second-quarter revenues is pinned at $147 million, showing year-over-year growth of 13.1%.

Other Factors at Play

CooperSurgical (CSI)

CooperSurgical offers a variety of medical devices and surgical instruments that are primarily utilized by gynecologists and obstetricians. In the first quarter of fiscal 2018, the segment accounted for 24.6% of total revenues. Meanwhile, the Zacks Consensus Estimate for the segment’s second-quarter revenues is pegged at $162 million, indicating growth of 42.1% from the prior-year quarter. Management is also optimistic about the recently-closed acquisition of PARAGARD.

The fertility category posted revenues of $57 million, down 5% at cc. However, the Zacks Consensus Estimate for the segment is pegged at $63 million, up from $61 million recorded in the prior-year quarter. Recently, Cooper Companies acquired the assets of The LifeGlobal Group and its affiliates, which is likely to augment its fertility business.

Guidance Solid

For fiscal 2018, total revenues are projected in the band of $2,510-$2,560 million compared with the previous $2,480-$2,530 million.

Revenues at the CVI segment are now estimated in the range of $1,865-$1,900 million, higher than the earlier $1,830-$1,865 million.

Adjusted earnings per share are now anticipated in the band of $11.70-$11.90 versus $11.35-$11.65 earlier.

Intense Competition

Cooper Companies operates in a highly competitive industry. Both of the company’s business segments face considerable competition from peers. CooperVision primarily faces competition in the spherical, toric and multifocal lens categories from the likes of Johnson & Johnson (NYSE:JNJ) Vision Care, CIBA Vision owned by Novartis AG and Valeant Pharmaceuticals’ Bausch & Lomb.

What Our Model Predicts

Our quantitative model does not conclusively predict a beat for Cooper Companies this earnings season. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates.

Zacks ESP: The Earnings ESP for Cooper Companies is -0.45%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Cooper Companies carries a Zacks Rank #3.

Stocks Worth a Look

Here are a few stocks worth considering as they have the right combination of elements to post beats this earnings season.

AbbVie Inc. (NYSE:ABBV) has an Earnings ESP of +0.25% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ally Financial Inc. (NYSE:ALLY) has an Earnings ESP of +3.14% and a Zacks Rank #3.

American Tower Corporation (NYSE:AMT) has an Earnings ESP of +0.02% and a Zacks Rank #3.

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