Is Cooper Companies Undervalued Amid Activist Pressure and Strategic Uncertainty?

The Cooper Companies, a diversified healthcare conglomerate with operations spanning vision care and surgical solutions, finds itself at a crossroads in 2025. Activist investors Jana Partners and Browning West are pushing for divergent strategic realignments, while broader industry trends in healthcare consolidation and regulatory shifts amplify the stakes. This article examines whether the company's current valuation reflects its potential to unlock value through strategic restructuring, drawing on sector-wide precedents and financial metrics.

Activist Campaigns and Strategic Divergence

Jana Partners and Browning West have staked their claims on Cooper's board, advocating for distinct paths to value creation. Jana Partners, which has taken a direct stake in the company, is urging the sale of CooperVision's contact lens business to Bausch + Lomb, arguing that the division's low-margin, commoditized nature detracts from shareholder returns. Simultaneously, the firm is calling for a revamp of capital allocation strategies to prioritize higher-return investments.

Browning West, meanwhile, is advocating for a more radical split: the separation of CooperVision and CooperSurgical into distinct entities. The firm contends that CooperSurgical, which generates 32% of the company's revenue but faces regulatory headwinds in the U.S. surgical device market, would perform better as an independent entity or under a strategic buyer focused on medical technology. According to analysis, both campaigns highlight a shared critique-Cooper's current structure dilutes its ability to capitalize on sector-specific opportunities-and demand board restructuring to accelerate change.

Financial Health and Valuation Metrics

Cooper's financials present a mixed picture. As of 2025, the company maintains a debt-to-equity ratio of 29.6%, with $8.4 billion in equity and $2.5 billion in debt, suggesting a relatively conservative balance sheet. Q3 2025 results showed total revenue of $1.06 billion, with CooperVision contributing $718.4 million and CooperSurgical $341.9 million. Non-GAAP diluted EPS rose 15% year-over-year to $1.10, and the company raised its 2025 revenue guidance to $4.076–$4.096 billion.

However, Cooper's forward P/E ratio of 16.5x lags behind the healthcare sector's average performance, particularly as healthcare stocks have surged 14.4% over the past six months. The company's 7.3% annual revenue growth over two years also trails peers in a sector marked by rapid innovation and consolidation. According to industry analysis, this discrepancy raises questions about whether the market is discounting Cooper's potential to restructure or if its current valuation reflects genuine operational challenges.

Industry Context: Fragmentation and Strategic Realignment

The healthcare sector has seen a surge in strategic realignments since 2020, driven by macroeconomic pressures, regulatory shifts, and technological disruption. In Europe, HealthTech valuations have evolved from fragmented point solutions to integrated infrastructure, with AI-driven tools accounting for 65% of first-half 2025 funding. Meanwhile, U.S. healthcare providers have increasingly turned to mergers and acquisitions to offset labor costs and navigate policy constraints.

For medical device and surgical companies, valuation multiples vary widely. Private firms with $1–50 million in revenue command 3.6x to 5x revenue multiples, underscoring the sector's sensitivity to scale and innovation. Cooper's current structure-spanning two distinct markets-may be penalized by investors seeking clarity in a fragmented landscape.

Case Studies: Spin-Offs and Valuation Gains

Historical precedents suggest that strategic realignment can unlock significant value. Sandoz's 2023 spin-off, for instance, led to a stronger balance sheet through debt refinancing and a new $2 billion revolving credit facility, reducing annual interest costs. Similarly, Solventum's 2024 spin-off from 3M allowed the standalone entity to focus on healthcare technology innovation while 3M refocused on industrial markets. According to industry reports, these cases illustrate how separation can enhance operational efficiency and investor clarity.

In the medical device space, while direct spin-off metrics for Cooper-like scenarios are sparse, the broader trend toward specialization is evident. For example, the Software as a Medical Device (SaMD) market is projected to grow at a 13.5% CAGR through 2033, driven by AI integration and digital diagnostics. A focused CooperVision, if separated, might better align with such high-growth trajectories.

Is Cooper Undervalued? A Strategic Assessment

Cooper's current valuation appears to reflect skepticism about its ability to navigate activist pressures and industry fragmentation. Its forward P/E of 16.5x is lower than the healthcare sector's average, and its stock has declined 21% year-to-date. However, this discount could represent an opportunity if strategic realignment-whether through a sale of CooperVision, a spin-off of CooperSurgical, or a focused vision care play-proves successful.

The key variables are execution risk and sector dynamics. If Jana or Browning West's proposals materialize, Cooper could benefit from the same valuation uplifts seen in Sandoz or Solventum. Conversely, protracted board battles or regulatory hurdles could delay value realization. Investors must weigh the likelihood of a swift resolution against the company's existing financial strength and the sector's appetite for specialized, innovation-driven players.

Conclusion

Cooper Companies' undervaluation thesis hinges on its capacity to transform under activist pressure. While its financials remain stable, the company's fragmented structure and regulatory challenges in the surgical segment have dampened investor enthusiasm. By benchmarking against industry realignment trends and historical spin-off successes, the case for strategic restructuring becomes compelling. For investors, the critical question is not whether Cooper is undervalued, but whether the board will act decisively to unlock that value before market patience wanes.