09 Jul 2025 05:00:00 ET │ 78 pages US MedTech 2Q25 Preview: But Wait, There's More CITI'S TAKE At the mid-year 2025 mark it has already been a long year, given macro- economic headlines (including tariffs) and uncertainty the new normal. MedTech has largely withstood the healthcare headwinds but has been caught in the macro. While tariffs seem to have been normalized or at least absorbed, with the 90-day pause on April 2 reciprocal tariffs extended to August 1, and the U.S.-China pause expiring August 12 up ...

Core Insights - The Cooper Companies, Inc. (COO) is focusing on strategic investments in innovation and has a diversified product base that supports long-term growth, although it faces near-term macro and inventory challenges, particularly in fertility and global consumer spending [1] Financial Performance - COO's shares have decreased by 20.8% this year, while the industry has gained 0.6% and the S&P 500 Index has increased by 4.9% [2] - The company has a market capitalization of $14.23 billion and is expected to see a 10.1% improvement in its bottom line over the next five years [2] - COO's adjusted earnings per share (EPS) increased by 14% year over year to 96 cents, with an operating margin expansion to 24.9% due to efficiency gains and disciplined cost management [4][7] Product Innovation - The MyDay daily silicone hydrogel lenses and MySight myopia management products are experiencing significant growth, with increases of 10% and 35% year over year, respectively [5] - Continued expansion in toric and multifocal ranges, along with new product launches like MyDay Energys, indicates sustained future revenue momentum [5] Surgical Portfolio Strength - CooperSurgical reported an 8% revenue growth, driven by a 13% increase in office-based surgical devices and an 18% rise in PARAGARD IUD sales, providing diversification against near-term fertility pressures [6] Challenges - Fertility revenue growth has slowed to 3%, with declines in Asia Pacific and deferred capital spending by clinics, leading to revised low-single-digit growth expectations for the fertility segment in fiscal 2025 [8] - Channel inventory reductions and patients opting for shorter-term lens supplies are impacting revenue visibility, despite strong underlying demand [9] - COO anticipates a $4 million tariff impact on fiscal 2025 COGS and a 3% EPS headwind in fiscal 2026 due to ongoing tariff and foreign exchange risks [10] Revenue Estimates - The Zacks Consensus Estimate for fiscal 2025 revenues is $4.12 billion, reflecting a 5.7% growth from the previous year, with adjusted EPS expected to improve by 10% to $4.06 [11]

Financial Performance & Guidance - CooperCompanies' FY24 revenue reached $3.9 billion[6] - The company anticipates FY25 total revenue between $4.107 billion and $4.146 billion[10] - CooperVision's FY24 revenue was $2.6 billion[18], with FY25 guidance between $2.759 billion and $2.786 billion[10] - CooperSurgical's FY24 revenue was $1.29 billion[22], with FY25 guidance between $1.347 billion and $1.359 billion[10] - CooperCompanies projects organic growth of 5%-6% for FY25[10] Market Position & Growth - The global soft contact lens market is an $11 billion market[12] - CooperVision holds 26% of the contact lens market share[13] - The fertility market is estimated to be over $2 billion globally[27] and has historically grown at 5-10% annually[27] - CooperSurgical has grown through 40+ acquisitions since 1990[24] Business Segments - Toric and multifocal lenses account for 48% of CooperVision's revenue[18] - Fertility products and services comprise 40% of CooperSurgical's revenue, while office and surgical products make up 60%[22]

Group 1: Copart Inc. (NASDAQ: CPRT) - Copart's stock has experienced a significant decline, dropping over 21% from its all-time highs, with the Relative Strength Index (RSI) falling to 21, indicating it is deeply oversold and may be poised for a bounce [3][4]. - The recent plunge in Copart's stock price was attributed to an underwhelming earnings report, despite the company achieving its highest-ever revenue, which led to concerns that expectations had outpaced fundamentals [4][5]. - Analysts maintain a Neutral rating on Copart, with a price target of $55, suggesting that the stock is currently trading below its fair value, presenting an attractive risk/reward scenario [5]. Group 2: Cooper Companies Inc. (NASDAQ: COO) - Cooper Companies' stock has been on a downward trend, hitting multi-month lows with an RSI in the low 20s, indicating oversold conditions [7]. - Following a strong earnings report that exceeded expectations and reaffirmed full-year guidance of 10-15% EPS growth, the stock saw a nearly 6% increase in one day, with the RSI beginning to rise [8][9]. - Analysts have a 12-month price forecast of $100.38 for Cooper Companies, indicating a potential upside of 38.77% from the current price of $72.33 [6]. Group 3: UnitedHealth Group Inc. (NYSE: UNH) - UnitedHealth's stock has declined over 50% from its April highs due to disappointing earnings and negative market sentiment [10]. - Despite bearish trends, the stock has shown signs of stabilization, with the RSI remaining below 30 and a bullish crossover in the MACD, indicating potential for recovery [11]. - Analysts have reiterated positive ratings, with KeyCorp maintaining an Overweight rating and a price target of $400, suggesting a potential upside of over 35% from current levels [12].

Summary of The Cooper Companies (COO) FY Conference Call - June 05, 2025 Company Overview - The Cooper Companies is a global medical device company with approximately two-thirds of its business in contact lenses and one-third in women's health, primarily focusing on fertility [3][4] - The company operates in over 30 countries with a revenue mix of more than half generated outside the U.S. [5] Core Business Insights - Cooper is a leader in the fertility market, with 40% of its surgical business related to fertility [4] - The company is experiencing secular growth trends in both vision and surgical segments, with a commitment to growing faster than the market [7][8] - CooperVision is projected to grow by 6-7% this year, while the market is expected to grow by 4-6% [8] Financial Performance and Guidance - The company aims for gross margin and operating margin expansion, despite facing foreign exchange (FX) headwinds since 2019 [9] - Free cash flow is projected to be between $350 million and $400 million, with a goal to improve free cash flow margin over the coming years [10][11] - The company has a history of consistent growth, with the exception of 2020 during COVID-19 [7] Market Dynamics - The contact lens market grew by 7% last year, with a fourth-quarter growth of 9%, but the company believes the actual growth is closer to 6% due to inventory dynamics [12][13] - Competitors like J&J and Alcon reported mid-single-digit growth, leading Cooper to adjust its market growth expectations to 4-6% [14] - Fitting activity remains strong, with consumers preferring premium products, particularly in the MyDay portfolio [17][20] Product Innovations - Cooper offers a differentiated portfolio, including myopia control products that are unique in the market [6] - The MyDay product line includes a wide range of toric and multifocal lenses, with the recent launch of Energous, which provides a digital boost for myopic users [23][24] - The company plans to launch MiSight, a myopia control lens, in Europe next year, which is expected to drive significant growth [25][30] Strategic Initiatives - Cooper is focusing on expanding its production capacity and improving operational efficiencies to leverage past investments [48][50] - The company is prioritizing free cash flow towards debt reduction and has engaged in stock buybacks due to perceived undervaluation [51][52] - The surgical segment is expected to see mid-single-digit growth as the fertility market rebounds [58][59] Future Outlook - The company anticipates that the contact lens market will continue to grow at 4-6% next year, with CooperVision expected to outperform this growth [57] - The surgical business is also projected to recover, contributing to overall revenue growth [59] - Cooper is optimistic about the potential for increased free cash flow due to reduced capital expenditures and improved operational performance [61][62] Additional Insights - The company is actively working on integrating its surgical and vision businesses to drive better margin expansion [49] - There is a focus on educating healthcare professionals and consumers about myopia control products, particularly in new markets like Japan [39][40] This summary encapsulates the key points discussed during the conference call, highlighting the company's strategic direction, market dynamics, and financial outlook.

Group 1 - Zacks Premium offers various tools for investors to enhance their stock market strategies, including daily updates on Zacks Rank and Industry Rank, Equity Research reports, and Premium stock screens [1][2] - The Zacks Style Scores provide a rating system for stocks based on value, growth, and momentum, helping investors identify securities with high potential for market outperformance [2][3] Group 2 - The Value Score focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, and Price/Cash Flow [3] - The Growth Score assesses a company's financial health and future outlook by analyzing projected and historical earnings, sales, and cash flow [4] - The Momentum Score evaluates stocks based on price trends and earnings estimate changes to identify optimal buying opportunities [5] Group 3 - The VGM Score combines the Value, Growth, and Momentum Scores to highlight stocks with the best overall potential [6] - The Zacks Rank is a proprietary model that utilizes earnings estimate revisions to guide investors in building successful portfolios [7][10] Group 4 - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [8] - Investors are encouraged to select stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal investment potential [10][11] Group 5 - The Cooper Companies Inc operates globally in the specialty medical device sector, with two segments: CooperVision and CooperSurgical [12] - Currently rated 3 (Hold) with a VGM Score of A, Cooper is projected to achieve year-over-year earnings growth of 9.8% for the current fiscal year [12][13] - Recent upward revisions by analysts have increased the Zacks Consensus Estimate for Cooper to $4.05 per share, with an average earnings surprise of 3.2% [13]

Core Insights - The Cooper Companies' international operations are crucial for understanding its financial resilience and growth potential [1][2] - The company's total revenue for the quarter was $1 billion, reflecting a year-over-year increase of 6.3% [4] International Revenue Breakdown - EMEA contributed 24.80% of total revenue, amounting to $248.6 million, exceeding Wall Street's expectations by +1.97% [5] - Asia Pacific generated $138.6 million, representing 13.83% of total revenue, also surpassing projections by +1.47% [6] Revenue Projections - Analysts forecast total revenue of $1.07 billion for the current fiscal quarter, indicating a 6.7% increase from the previous year [7] - For the full year, total revenue is expected to reach $4.12 billion, a 5.7% increase year-over-year [8] Market Trends and Challenges - The reliance on global markets presents both opportunities and challenges for The Cooper Companies, necessitating close examination of international revenue trends [9][10]

Core Insights - Cooper Companies (COO) reported strong fiscal Q2 2025 results, with revenue of $1 billion (up 6.3% YoY) and adjusted EPS of 96 cents (up 14% YoY), exceeding analyst expectations [1] - The company maintains confidence in its core product momentum despite macroeconomic challenges, revising full-year revenue guidance to $4,107-$4,146 million and adjusted EPS to $4.05–$4.11 [1] Company Performance - COO's year-to-date performance shows a 25.7% decline in share price, contrasting with gains of 7.3% for Johnson & Johnson (JNJ) and 1.3% for Alcon (ALC) [4] - The company underperformed against the industry decline of 1.4% and the S&P 500 Index's increase of 0.1% [4] Short-Term Growth Drivers - Improved availability of MyDay lenses and strong demand are key short-term catalysts, with management noting increased fitting activity following capacity expansions [7] - The launch of MyDay Energys in Canada and upgraded Clarity One Day Sphere in Japan has been positively received, setting the stage for revenue growth in Q4 [7][8] Long-Term Growth Catalysts - CooperVision leads in specialty lenses, with Myopia management segment growing 35% in Q2, projected to exceed $100 million in sales for fiscal 2025 [13] - Operational leverage is strong, with gross margins at 68% (up 100 bps YoY) and operating margins at 25% (up 100 bps), supported by lower operating expenses [14] Challenges and Market Risks - The fertility business grew only 3% (2% organic) in Q2, attributed to declining fertility cycles in Asia Pacific and capital purchase deferrals globally [17] - Global inventory corrections are impacting revenue, with a revised contact lens market growth assumption of 4-6% [18] - Tariff-related cost pressures of $4 million are expected in fiscal 2025, with currency headwinds projected to impact revenue by 0.5% and EPS by 1% [19] Conclusion - Cooper Companies enters the second half of fiscal 2025 with strong operational execution and growing market share, although macro and regional challenges may limit near-term growth [24]

Financial Performance - For the three months ended April 30, 2025, CooperVision reported net sales of $669.6 million, a 5% increase compared to $635.9 million in the same period of 2024[92]. - For the six months ended April 30, 2025, total net sales reached $1,315.7 million, reflecting a 5% growth from $1,257.4 million in the same period of 2024[96]. - For the three months ended April 30, 2025, total net sales increased by 8% to $332.7 million compared to $306.7 million in the same period of 2024[103]. - Consolidated gross margin improved to 68% in the three months ended April 30, 2025, up from 67% in the same period of 2024, due to efficiency gains and a favorable product mix[110]. - Operating income for the company increased by 14% to $184.8 million in the three months ended April 30, 2025, compared to $161.7 million in the same period of 2024[121]. Sales by Product Type - Toric and multifocal lenses generated $328.4 million in sales, up 6% from $310.3 million in the prior year, while spherical and other lenses increased by 5% to $341.2 million from $325.6 million[92]. - CooperSurgical's net sales are supported by a diversified portfolio in the fertility and women's health care market, with significant contributions from products like MiSight and Biofinity[99]. - Office and surgical net sales rose by 13% to $205.8 million, driven by increased sales of Paragard contraceptive intrauterine devices and the acquisition of obp Surgical[107]. - Fertility net sales increased by 3% to $126.9 million, attributed to higher revenue from gamete services[107]. Regional Sales Performance - In the Americas region, net sales increased by 7% to $282.4 million for the three months and $553.3 million for the six months, compared to $264.4 million and $517.0 million, respectively, in 2024[98]. - EMEA region sales grew by 5% to $248.6 million for the three months and 4% to $495.1 million for the six months, compared to $237.0 million and $475.2 million in 2024[98]. - Asia Pacific region sales saw a 3% increase to $138.6 million for the three months and a 1% increase to $267.3 million for the six months, compared to $134.5 million and $265.2 million in 2024[98]. Expenses and Costs - Selling, General and Administrative (SGA) expenses for CooperVision increased by 5% to $236.9 million, while CooperSurgical's SGA expenses rose by 2% to $136.8 million[113]. - Research and Development (R&D) expenses increased by 17% to $45.5 million in the three months ended April 30, 2025, primarily due to myopia management programs[116]. Cash Flow and Capital Management - Operating cash flow for the first six months of fiscal 2025 increased to $286.8 million, up from $233.7 million in the same period of fiscal 2024, reflecting improved net income and changes in operating capital[133][134]. - Cash used in investing activities decreased to $(176.0) million in the first half of fiscal 2025, compared to $(398.9) million in the first half of fiscal 2024, primarily due to a $200 million payment for the Cook Medical acquisition in 2024[135]. - Cash used in financing activities was $(105.2) million in the first six months of fiscal 2025, mainly for repayments on revolving credit and the first installment related to the Cook Medical acquisition[136]. - Working capital increased to $1,113.2 million as of April 30, 2025, from $928.7 million as of October 31, 2024, mainly due to higher inventories and accounts receivable[132]. Debt and Compliance - As of April 30, 2025, the company had outstanding debt of $2.6 billion and may use interest rate swaps to manage interest rate risk[148][149]. - As of April 30, 2025, the company had total credit facilities of $3.8 billion, with $2.5 billion outstanding and $1.27 billion available[137]. - The company remains in compliance with all debt covenants and anticipates sufficient cash flow to meet its needs for at least the next 12 months[138]. Tax and Interest - Interest expense decreased by 16% to $24.2 million in the three months ended April 30, 2025, due to lower interest rates and average debt balances[126]. - The effective tax rate for the three months ended April 30, 2025, was 39.3%, up from 31.6% in the same period of 2024, primarily due to changes in valuation allowance[129]. Market Outlook - CooperVision is focused on expanding its market presence through new product introductions and acquisitions, particularly in the silicone hydrogel contact lens segment[81]. - The company anticipates continued growth in the contact lens market driven by technological advancements and improved product offerings[80]. Currency Impact - A hypothetical 10% change in foreign currency exchange rates could result in a $31.8 million impact on operating income for the fiscal quarter ended April 30, 2025[147]. - CooperVision's sales growth was partially offset by unfavorable foreign exchange rate fluctuations of approximately $7.7 million for the three months and $22.4 million for the six months ended April 30, 2025[96]. Share Repurchase - As of April 30, 2025, the company had $215.8 million remaining for share repurchase under the 2012 program, having repurchased 0.5 million shares for $40.6 million at an average price of $75.60 per share during the first half of fiscal 2025[141].

Investors looking for stocks in the Medical - Dental Supplies sector might want to consider either Dentsply International (XRAY) or The Cooper Companies (COO) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings esti ...