CooperCompanies down 15%: Freedom analysts cite reasons for the sell-off

A cut to the full-year profit outlook and the decision to keep CooperSurgical within the business outweighed strong cash flow and an expanded share buyback program, Freedom Broker analysts note. In premarket trading, shares of medical device maker CooperCompanies (COO) were down about 15%. The current price of the stock is $54,1.

Why CooperCompanies shares fell

CooperCompanies is an international medical company operating through two main segments. CooperVision manufactures contact lenses, while CooperSurgical offers equipment and solutions for women’s health and reproductive medicine.

Freedom Broker analysts estimate that investors reacted negatively to two company decisions at once. CooperCompanies declined to sell CooperSurgical because the offers received, in management’s view, did not reflect the unit’s full value and long-term potential. At the same time, the company revised its full-year profit guidance downward.

The negative reaction was not contained by an increase in the share buyback program from $2 bn to $3 bn. After the expansion, the amount still available for repurchases totals about $1,5 bn. In the third fiscal quarter, CooperCompanies already repurchased about 4,9 million of its own shares for $339,1 million. The average repurchase price was $69,16 per share.

Revenue up 1%

CooperCompanies’ third-quarter revenue for fiscal 2026 increased 1% year over year to $1,066 bn. Organic growth was also 1%. GAAP diluted EPS reached $2,24 versus $0,49 a year earlier. The main driver of growth was a one-time tax impact of $307,2 million following the completion of a tax audit in the UK.

Adjusted EPS rose 4% to $1,15. Gross margin was 67% versus 65% a year earlier. Excluding one-off items, it also came in at 67%, but declined by 60 basis points due to higher manufacturing costs and unfavorable foreign-exchange effects.

Operating margin increased from 17% to 21%. Adjusted operating margin rose 30 basis points to 26% thanks to cost control and productivity initiatives. Interest expense declined from $25,4 million to $21,5 million amid lower rates and a reduced average debt balance.

CooperVision faced a slowdown

Third-quarter revenue at contact lens maker CooperVision totaled $717,0 million, unchanged from the year-ago level. The company reduced inventories in U.S. sales channels, which pressured results and, according to management expectations, will continue to affect performance in the fourth quarter. Sales of toric and multifocal lenses increased 1% to $363,8 million. Revenue from spherical lenses and other products fell 2% to $353,2 million.

In the Americas, CooperVision sales decreased 2% to $281,6 million. In EMEA, they rose 6% to $309,4 million, while in the Asia-Pacific region they fell 10% to $126,0 million.

CooperSurgical delivered growth

CooperSurgical revenue, focused on women’s health, reproductive medicine, and genetics, increased 2% year over year to $349,2 million, while organic growth was 3%. Sales in the office and surgical segment rose 2% to $208,0 million. Revenue in reproductive medicine increased 3% to $141,2 million. On an organic basis, growth in this business reached 5%.

Management noted resilient momentum in reproductive medicine, but following a strategic review decided not to sell CooperSurgical. The company intends to focus on profitable growth across the segments, cash generation, and disciplined capital allocation.

Free cash flow up 66%

One of the quarter’s strongest metrics was free cash flow: it rose 66% to $273,0 million. Cash flow from operating activities totaled $341,7 million, and capital expenditures were $68,7 million.

CooperCompanies reaffirmed its long-term goal of generating cumulative free cash flow of more than $2,2 bn over fiscal years 2026–2028. Despite this result, investors focused on weak CooperVision dynamics and the downward revision of profit guidance, according to Freedom Broker’s review.

The company updated its full-year forecast

For the fourth quarter, CooperCompanies expects total revenue in the range of $1,057–1,080 bn and organic growth of 0% to 2%. Adjusted EPS is forecast at $1,05–1,09. CooperVision revenue is expected to be $692–706 million with organic performance ranging from minus 2% to 0%. For CooperSurgical, the company forecasts revenue of $364–374 million and organic growth of 4–6%.

For the full fiscal year 2026, CooperCompanies expects revenue of $4,229–4,252 bn and organic growth of 2–3%. Adjusted EPS is projected in the range of $4,51–4,55. Freedom Broker analysts cite the downward revision to the full-year profit target as one of the factors behind the stock sell-off.

What the previous quarter showed

In the second quarter of fiscal 2026, CooperCompanies revenue grew 8% to $1,082 bn, and organic growth was 5%. Adjusted EPS increased 26%, from $0,96 to $1,21.

At the same time, GAAP loss was $0,40 per share due to expenses of $271,6 million related to the settlement of claims following the voluntary recall of CooperSurgical products in December 2023. Free cash flow in the second quarter reached $96,4 million.

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