Cooper Companies' (COO) CooperVision Buys Paragon For $80M

In a bid to enhance its inorganic growth, The Cooper Companies, Inc. (NYSE:COO) announced that CooperVision has completed the buyout of Paragon Vision Sciences. Headquartered in Gilbert, AZ, Paragon provides orthokeratology (ortho-k), specialty contact lenses and oxygen permeable rigid contact lens material.

The transaction was closed for around $80 million. According to the company, this buyout is likely to prove neutral to earnings per share in fiscal 2018, excluding one-time charges and deal-related amortization. The company has trailing four-quarter revenues of approximately $15 million.

CooperVision Segment at a Glance

CooperVision manufactures and sells a wide range of contact lenses globally. The segment develops manufactures and markets a broad range of single-use, two-week and monthly contact lenses, featuring advanced materials and optics. The products are primarily designed for solving vision challenges like astigmatism, presbyopia and ocular dryness.

In the last reported third quarter of fiscal 2017, CooperVision revenues increased 8% at constant currency (cc) on a year-over-year basis. Geographically, CooperVision revenues increased 2% in the Americas, while revenues from the Asia Pacific and EMEA rose 13% year over year at cc. Also, fourth-quarter fiscal 2017 results, which are scheduled for release on Dec 7, are expected to show steady growth in the CooperVision Segment.

Market Prospects

According to a report by Grand View Research,the global contact lenses market is estimated to reach a worth of $17.72 billion by 2025. Thus, the company clearly has bountiful prospects in this market.

Focus on Acquisition

The company is focusing on strategic acquisitions to drive inorganic growth. It recently completed the takeover of the flagship contraception platform of Israel-based Teva Pharmaceutical Industries (NYSE:TEVA) — PARAGARD Intrauterine Device. This $1.1-billion cash transaction will bolster Cooper Companies’ CooperSurgical business in the contraceptive device market.

Stock Performance Solid

Over the last year, Cooper Companies has gained 45.2%, comparing favorably with the broader industry’s addition of 22%. Moreover, the current level is higher than the S&P 500's gain of 20.1%.

Cooper Companies is poised to gain from an expanding product portfolio and increasing penetration in international markets. Accretive acquisitions are also key catalysts for the long haul. Furthermore, the outlook for the contact lens industry is favorable, which is likely to boost the stock price. The company’s long-term expected earnings growth rate of 10.8% holds promise as well.

Estimate Revision Trend

Further, Cooper Companies’ estimate revision trend for the current quarter is favorable. In the past 30 days, two estimates moved up while one moved down. Estimates were up from $2.65 per share to $2.66.

Zacks Rank & Other Key Picks

Cooper Companies carries a Zacks Rank #2 (Buy).

Other top-ranked medical stocks are PetMed Express, Inc. (NASDAQ:PETS) , Align Technology, Inc. (NASDAQ:ALGN) and Myriad Genetics, Inc. (NASDAQ:MYGN) . Notably, PetMed, Align Technology and Myriad Genetics sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed has a long-term expected earnings growth rate of 10%. The stock has rallied roughly 73.5% over a year.

Align Technology has a long-term expected earnings growth rate of 28.9%. The stock has gained 170.3% in a year.

Myriad Genetics has a long-term expected earnings growth rate of 15%. The stock has gained 97.2% in a year.

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