Cooper Companies (COO) closed Friday at $67.34, surging 8.6% for the session and extending its weekly gain to approximately 11.9%. The sharp advance came despite a broad market selloff, with the S&P 500 falling 2.64% and the Nasdaq Composite dropping 4.18%, as a stronger-than-expected May jobs report raised concerns that the Federal Reserve may maintain its hawkish stance or even hike rates again.
The medical device company, known for its CooperVision contact lens business and CooperSurgical women's health unit, reported fiscal second-quarter results late Thursday that topped analyst expectations. Revenue rose 8% year-over-year to $1.082 billion, while non-GAAP diluted earnings per share climbed 26% to $1.21. The non-GAAP metric excludes certain one-time items, allowing investors to focus on underlying operational performance.
CEO Al White described the quarter as strong, highlighting record revenue and non-GAAP EPS. He also noted that the company has now settled "substantially all" claims related to the voluntary recall of fertility media products at CooperSurgical, a development that investors have linked to the ongoing strategic review of that unit. The review, which includes a potential sale of CooperSurgical, has been a key catalyst for the stock.
However, the company reported a GAAP diluted loss of $0.40 per share, primarily due to a $271.6 million net pre-tax charge tied to litigation liabilities from the December 2023 recall. Management expects some of that cost to be recovered through insurance. For now, investors appear to be looking past the charge, focusing instead on the strategic review and the strong core earnings.
Analysts have taken note of the developments. KeyBanc's Brett Fishbin and William Korner highlighted the strategic review and a possible CooperSurgical sale as key drivers, according to Barron's. J.P. Morgan's Robbie Marcus maintained a Neutral rating but trimmed his price target to $71 from $80, noting that the review update and share buyback plan "should be enough to put a floor on the share price."
CooperVision remains the primary growth engine. Revenue for the contact lens segment increased 8% to $723.5 million in the quarter. However, Asia-Pacific sales fell 6% to $130.6 million, while the Americas and EMEA regions held steady. White cited "consumer weakness" in Japan and China as the main drag, according to an Investing.com transcript of the earnings call.
The company also revised its full-year revenue forecast downward to a range of $4.285 billion to $4.321 billion, but maintained its fiscal 2026 non-GAAP EPS target of $4.58 to $4.66. CFO Brian Andrews described the guidance as "prudent," citing higher costs and a weaker revenue outlook for CooperVision.
Looking ahead, investors will be watching for May CPI data on Wednesday, June 10, and May PPI on Thursday, June 11, both of which will influence expectations for the Federal Reserve's policy meeting on June 16-17. For Cooper, the key question is whether Friday's rally can hold. The earnings beat was a clear positive, but the trimmed guidance, ongoing Asia-Pacific weakness, and the uncertain outcome of the CooperSurgical review all present risks that could temper further upside.
