Key Takeaways
- Shares of Cooper Companies plummeted over 15% following the board’s decision to retain the CooperSurgical division, disappointing investors who anticipated a divestiture.
- Third-quarter revenue totaled $1.07 billion, falling short of the $1.10 billion Wall Street consensus.
- The company reduced its full-year adjusted earnings per share outlook to a range of $4.51-$4.55, down from the previous $4.58-$4.66 forecast.
- Annual revenue projections were lowered to $4.23-$4.25 billion from the earlier $4.29-$4.32 billion range.
- The CooperVision segment posted $717 million in Q3 revenue, declining from $723.5 million in the previous quarter due to strategic U.S. inventory adjustments.
Cooper Companies (COO) shares tumbled more than 15% during premarket hours on Thursday following a one-two punch: disappointing quarterly revenue results and an unexpected announcement that the company would maintain ownership of its CooperSurgical division.
The Cooper Companies, Inc., COO
Investors had been anticipating a possible divestiture of CooperSurgical, which focuses on women’s healthcare and fertility solutions. However, following a comprehensive strategic assessment that concluded late Wednesday, Cooper’s board reached a unanimous decision to keep the business unit.
This announcement triggered the dramatic selloff. COO emerged as the most significant decliner in the S&P 500 during Thursday’s premarket session.
Regarding financial performance, Cooper exceeded adjusted earnings per share projections, delivering $1.15 versus the anticipated $1.12. However, the revenue picture disappointed investors. Third-quarter sales reached $1.07 billion, missing the consensus estimate of $1.10 billion.
The revenue gap stemmed primarily from an intentional drawdown of U.S. distribution channel inventory for CooperVision contact lenses, an action connected to the ongoing strategic evaluation.
The CooperVision segment generated $717 million in revenue during the quarter ending July 31, representing a decrease from the prior quarter’s $723.5 million.
Reduced Outlook Compounds Investor Concerns
Cooper further dampened sentiment by revising downward its fiscal year projections. The adjusted earnings per share guidance now sits at $4.51 to $4.55, compared to the earlier range of $4.58 to $4.66. Wall Street consensus stood at $4.63 per share.
Annual revenue expectations were similarly scaled back to $4.23 to $4.25 billion from the previous $4.29 to $4.32 billion outlook. Analysts had been modeling $4.31 billion in revenue.
Looking ahead to the fourth quarter, Cooper provided guidance calling for revenue between $1.06 and $1.08 billion with adjusted earnings per share ranging from $1.05 to $1.09.
Management indicated that inventory-related challenges impacting the third quarter will persist through the fourth quarter.
Analyst Perspective
KeyBanc analyst Brett Fishbin noted that the market will require time to digest both the guidance reduction and the strategic review’s outcome without a transaction. He maintains a Sector Weight rating on Cooper shares.
A CooperSurgical sale had been viewed by market participants as an opportunity to transform Cooper into a focused contact lens enterprise, potentially making it an attractive takeover target. With that possibility now off the table, the investment thesis has shifted considerably.
In related news, Cooper disclosed an expansion of its share buyback program to $3 billion from the previous $2 billion authorization.
As the world’s second-largest contact lens producer after Johnson and Johnson’s Acuvue franchise, Cooper continues to navigate challenges.
The U.S. contact lens channel inventory normalization remains the primary operational headwind as the company enters the final quarter of fiscal year 2026.
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