Stifel Lowers Cooper Companies PT to $85, Maintains Buy Rating

Stifel Lowers Cooper Companies PT to $85, Maintains Buy Rating

Stifel has revised its price target for Cooper Companies (COO) to $85, down from the previous $90, while maintaining a Buy rating on the stock. This adjustment follows two consecutive quarters of lowered revenue guidance for the fiscal year 2025, particularly in the Vision segment. Despite these setbacks, management remains optimistic about regaining market share in the contact lens sector by 2026 [1].

Cooper Companies operates in two primary segments: CooperVision and CooperSurgical. CooperVision is a leading contact lens business, controlling approximately one-fourth of the U.S. market, while CooperSurgical focuses on reproductive care, fertility, and women's health. CooperSurgical's product portfolio includes the INSORB, Lone Star, and Doppler Blood Flow Monitor, as well as hormone-free IUDs and cord blood storage solutions [2].

The company's financial health is robust, with a 1-year revenue growth rate of 6.4% and a 3-year growth rate of 9.8%. The operating margin stands at 19%, net margin at 10.39%, and gross margin at 67.2%, reflecting strong profitability and efficient cost management. The company's current ratio of 2.1 indicates ample liquidity, while the debt-to-equity ratio of 0.31 suggests prudent financial leverage [2].

However, there are warning signs. The Altman Z-Score of 3.62 indicates a strong financial situation, but the company's asset growth outpacing revenue growth could signal inefficiencies. Additionally, insider activity shows a significant sell-off over the past 12 months, with insider sell value amounting to $27.64 million [2].

Despite these challenges, the company's strong market position and innovative product offerings continue to drive revenue growth. The EBITDA margin of 27.57% and consistent revenue per share growth reflect effective cost management and operational leverage [2].

Cooper Companies is currently trading with a P/E ratio of 35.97, P/S ratio of 3.73, and P/B ratio of 1.78, suggesting potential undervaluation. Analyst sentiment remains positive, with a target price of $89.89 and a recommendation score of 2.1 [2].

In conclusion, while Cooper Companies faces challenges with revised revenue guidance, its strong market position, consistent revenue growth, and attractive valuation metrics provide a solid foundation for future performance. Investors should remain vigilant of sector-specific risks and insider activity as they assess the company's long-term prospects.

References:
[1] https://www.marketscreener.com/news/stifel-adjusts-price-target-on-cooper-companies-to-85-from-90-maintains-buy-rating-ce7c50dfdf8ff62c
[2] https://www.gurufocus.com/news/3084251/stifel-adjusts-price-target-for-cooper-companies-coo