Reasons to Add Cooper Companies Stock to Your Portfolio Now

Core Insights - The Cooper Companies, Inc. (COO) is experiencing growth driven by CooperVision's premium lens migration and MiSight's leadership in myopia management, alongside CooperSurgical's women's health and fertility portfolio [1] - Near-term performance is impacted by channel volatility, private-label transition risks, softness in the Asia-Pacific region, and tariff/foreign exchange pressures, although long-term opportunities remain robust [1] Financial Performance - COO's shares have increased by 15.5% over the past six months, outperforming the industry growth of 12.9% and the S&P 500 Index's increase of 14.5% [2] - The company has a market capitalization of $16.19 billion and is expected to see a 7.8% improvement in its bottom line over the next five years, with earnings beating estimates in three of the last four quarters [4] Growth Drivers - CooperVision's MyDay daily silicone hydrogel franchise is a key growth engine, with strong global rollout and uptake in various lens types, supported by expanding private-label contracts [5] - Capacity constraints in Asia-Pacific have been resolved, allowing for improved execution and higher revenues per patient, despite lower gross margins from daily silicone hydrogel lenses [6] - MiSight, the only FDA-approved contact lens for myopia control, reported 37% growth in Q4 and nearly $104 million in sales for fiscal 2025, with management guiding for 20-25% growth in fiscal 2026 [7] Operational Improvements - A recent reorganization is expected to yield nearly $50 million in annual pretax savings starting in fiscal 2026, enhancing cash flow and operational efficiency [10] - Operating margins expanded to 27% in Q4, with further improvements anticipated, while free cash flow reached $150 million, raising the cumulative target for fiscal 2026-2028 to over $2.2 billion [11] Capital Allocation - The company emphasizes shareholder returns, having repurchased nearly $300 million of stock in fiscal 2025, with plans for similar allocations in fiscal 2026 supported by a $2 billion authorization [12] - Free cash flow is projected to rise to $575-$625 million in fiscal 2026 as capital expenditures normalize, improving net leverage to 1.76x [12] Challenges - Gross margin pressures persist due to the mix shift towards lower-margin daily silicone hydrogel lenses and ongoing tariff impacts, with management guiding for further declines in fiscal 2026 [13][14] - The Asia-Pacific region, particularly China, saw a 28% decline in Q4 due to weaknesses in low-margin e-commerce channels, with management prioritizing profitability over volume [15] - Fertility demand in the CooperSurgical segment remains sensitive to consumer spending, leading to conservative guidance for the next fiscal year despite early signs of improvement [16] Revenue Estimates - The Zacks Consensus Estimate for fiscal 2026 revenues is $4.31 billion, reflecting a 5.3% growth from the previous year, with adjusted EPS expected to improve by 9.5% to $4.51 [17]