Equity prospects

Cooper Companies

Michael Bray, Research Analyst

Price$316.63

52 week high-low$365.68—$236.68

Net yield0.02%

Hist / pros per32.46—27.83

Equity market cap$16,886

Previously a sprawling healthcare conglomerate, Cooper Companies has now found its focus within the speciality contact lens (Cooper Vision, 75% of revenues) and women’s healthcare (Cooper Surgical, 25%) markets. Although there are minimal synergies between them, Cooper has settled on these markets because of their differing qualities. 

Cooper Vision has been growing revenues at +6-8% per annum. This has been off the back of wearers upgrading their lenses from hydrogel to the more comfortable silicon hydrogel material and the move towards daily rather than bi-weekly or monthly lenses. Cooper’s highest margin product is their daily silicon hydrogel lenses (e.g. MyDay), where management continue to see good growth prospects. Whilst the annuity-like nature of contact lenses (Cooper’s customers typically stay with them for seven years) provide a stable recurring revenue stream.

Cooper Surgical is a slower growth business (+2-4% revenue growth p.a.), as it operates in the more mature woman’s healthcare market, which includes fertility, but is more cash generative. This allows the business to invest in perceived growth areas within the contact lens market, such as its recently launched paediatric myopia (short-sightedness) management lens, MiSight. However, MiSight’s commercial viability remains unproven.

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