CooperCompanies Earnings: Solid Results; Expect Moderate 2025 Growth Despite Supply Constraints

Narrow-moat CooperCompanies reported solid fourth-quarter earnings and capped off the fiscal year in a nice fashion. Total sales of $1.0 billion were up 9.8% year over year and came in slightly higher than our estimate. The vision and surgical segments enjoyed a solid performance and delivered 8.6% and 12.4% growth, respectively. Margins also tracked ahead of our expectations and helped beat full-year EPS guidance by low single digits. Despite the good readout, 2025 guidance looks slightly below consensus estimates, with management citing some demand softness at the end of November in regions like the US and China. We think this spooked investors somewhat and sent shares down about 5% after hours, but we see it more as a slight hiccup and still expect moderate growth in 2025. While our assumption of 6% growth is below growth levels over the past four years, we think cooling inflation puts pressure on Cooper over the size of price increases it can make for contact lenses; it expects price rises for these products to contribute about a third of growth. That said, the demand environment still looks favorable and we still expect further lens trade-ups. We maintain our $90 fair value estimate.