Will Segmental Revenues Aid Cooper's (COO) Q1 Earnings?

The Cooper Companies Inc. (NYSE:COO) is scheduled to report first-quarter fiscal 2018 results on Mar 8. The results are anticipated to display steady growth in CooperSurgical segment or CSI — one of the major revenue components. While this is expected to drive first-quarter revenues, declining results in the CooperVision or CVI and Fertility segments might act as dampeners.

Notably, Cooper delivered fourth-quarter fiscal 2017 earnings of $2.65 per share, marginally beating the Zacks Consensus Estimate by a penny. The trailing four-quarter positive average earnings surprise came in at 4.40%.

CooperSurgical — A Key Catalyst

The Zacks Consensus Estimate for the CooperSurgical revenues is pegged at $150 million for first-quarter fiscal 2018, up 22% from the reported figure in fourth-quarter 2017. Notably, revenues in the last reported quarter surged 15% year over year.

The Cooper Companies, Inc. Price and EPS Surprise

The Cooper Companies, Inc. Price and EPS Surprise | The Cooper Companies, Inc. Quote

Growth in this segment is likely to be fueled by acquisitions and organic growth. The company recently completed the acquisition of PARAGARD IUD from Teva. PARAGARD is the only IUD in the U.S. market that is hormone-free, long lasting and irreversible. Management remains bullish about PARAGARD as a product and deems it to be a strategic fit within CooperSurgical.

Furthermore, the company recently purchased an existing manufacturing facility in Costa Rica to consolidate a significant portion of global manufacturing within CooperSurgical. Management also plans to initiate production of the Wallace Transfer Catheter in near future, which will enable reduction of costs and improvement of margins.

Other Key Factors Likely to Influence Q1

Solid Product Portfolio: Cooper has been gaining on the back of its flagship silicone hydrogel lenses led by Clariti and MyDay in the daily space and Biofinity. The company is also expanding offerings geographically and recently started introducing the MyDay Toric in US market with a plan of launching it soon. Notably, MyDay Toric has been received incredibly well internationally owing to its customable designs and a similar response in the domestic market is also anticipated. Additionally, Biofinity lenses have continued to perform very well with diversified growth globally.

CooperVision & Fertility Estimates Dull: Meanwhile, the CooperVision and Fertility segments are expected to witness a decline in first-quarter fiscal 2018. Notably, the Zacks Consensus Estimate for CooperVision is pegged at $431 million, down 1.8% from the last-reported quarter. Additionally, the Fertility the Zacks Consensus Estimate for the Fertility segment is at $63 million, exhibiting a decline of 6% from the last quarter.

Our quantitative model conclusively shows an earnings beat for Cooper this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates.

Overall, for 2018, the company expects to report revenues in the range of $2.48-$2.53 billion, indicating a 6-8% year-over-year growth. This will comprise of $1.83 to $1.87 billion at CooperVision. For the first quarter, CooperSurgical revenues are anticipated to be around 150 million, with PARAGARD contributing for roughly 34 million. Furthermore, the company also expects to meet its targeted earnings per share accretion of 70-75 cents for PARAGARD for full-year 2018.

The company’s earnings per share guidance lies within the range of $11.35-$11.65, up 17-20%.

For the quarter-to-be-reported, the Zacks Consensus Estimate for revenues is pegged at $581.61 million, reflecting year-over-year growth of 16.5%. Meanwhile, the Zacks Consensus Estimate for earnings is at $2.52 per share, showing year-over-year growth of 30.6%.

Zacks ESP: Earnings ESP for Cooper is +0.04%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Cooper carries a Zacks Rank #3. A favorable Zacks Rank increases the predictive power of ESP and the company’s positive ESP makes surprise prediction feasible.

Other Stocks Worth a Look

Here are a few similar stocks worth considering as these too have the right combination of elements to post an earnings beat this season.

Opexa Therapeutics, Inc. (NASDAQ:ACER) has an Earnings ESP of +10.71% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank Stocks Here.

Autodesk, Inc. (NASDAQ:ADSK) has an Earnings ESP of +9.5% and a Zacks Rank #3.

Adverum Biotechnologies, Inc. (NASDAQ:ADVM) has an Earnings ESP of +0.97% and a Zacks Rank #3.

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