Strong Day Expected After COO Reports Stellar EPS Results, Analysts Raising Targets

The Cooper Companies (NYSE:COO) handily beat estimates when it reported fiscal 3Q 2012 (F3Q) results Thursday night. Total sales for F3Q came in at $378M, up 7.6% year over year (up 11.6% if not for foreign exchange headwinds), while EPS for the period was $1.45, trouncing the analyst consensus estimate of $1.29. COO’s contact lens business (CVI) reported revenue of $314M, up 5.3% year over year (up 10% without foreign exchange effects), driving the earnings outperformance. Lower operating costs and a favorable tax rate in the period added to the EPS upside, but analysts were impressed with the performance, as organic growth was still much better than expected. Importantly, the company raised its financial guidance to the Street: Revenues for 2012 are now expected to be in the range of $1.44B – $1.45B (up from $1.40B – $1.44B) and EPS is anticipated to be between $5.19 – $5.24 (up from the prior $4.90 – $5.15 guidance range). The stellar top and bottom  line performance in F3Q, as well as the higher operating margins in the period, signaled to analysts and investors that, in fact, last quarter (F2Q) was an anomaly and the business should continue to exhibit strong performance over the next several quarters – see PropThink’s August story.

Market growth for contact lenses remains in the 5% range, with Cooper’s business growing above the industry average as it continues to shift customers up to silicone hydrogel products, and execute on expanding its business geographically. Many analysts are raising estimates, and are also raising price targets Friday morning to the $100 level and higher, hence, shares of COO should open quite strong and continue to trade higher throughout the day. The company will host its analyst day on Sept. 13, and given the F3Q performance, it looks as though that could be another strong day for the stock.