Cooper Companies eyed by Wolfe Research as activist pressure mounts

Investing.com -- Wolfe Research has identified The Cooper Companies (NYSE: COO) as a new investment idea, highlighting the medical technology device company's position in the global contact lens market amid ongoing activist involvement.

Cooper Companies, with a market capitalization of $12 billion, operates through two main segments: CooperVision, which accounts for approximately 70% of revenue through contact lens sales, and CooperSurgical, representing roughly 30% of revenue with fertility and women's health products.

The company holds the top position in the contact lens market with approximately 43 million wearers globally. Cooper operates in the $11 billion soft contact lens market, which is growing at an annual rate of 4% to 6%. The market faces significant expansion potential, with expectations that 50% of the world's population, or approximately 5 billion people, will suffer from myopia by 2050.

In December, Cooper announced a new chairman and launched a strategic review following pressure from activists JANA and Browning West. The company also entered a cooperation agreement that added a director backed by Browning West.

According to Wolfe Research, the CooperVision segment's performance is being overshadowed by the underperforming CooperSurgical division. The research firm noted that approximately $2.3 billion in acquisitions over the past five years in the fragmented OB/GYN and fertility assets portfolio have impacted profitability and free cash flow.

Cooper trades at approximately 12.6 times 2027 estimated price-to-earnings ratio, representing a discount to its five-year average of 18.4 times and to peer Alcon.

Wolfe Research values Cooper at 18 times 2027 adjusted price-to-earnings, suggesting a fair value per share of $90. The company, which has an October 31 fiscal year-end, is expected to report earnings in late May.

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