The Cooper Companies, Inc. (NASDAQ:COO) shares traded lower Thursday after investors reacted to fiscal third-quarter results and weaker near-term guidance.
The decline far outpaced broader weakness, with the S&P 500 down 0.4% and the Health Care sector falling 0.51%.
Cooper shares had already dropped 15.96% after hours Wednesday to $53.35.
• Cooper Companies stock is at significant support. Why are COO shares at support?
Revenue Miss and Inventory Pressure Weigh
Cooper reported fiscal third-quarter revenue of $1.066 billion, up 1% year over year but below the $1.098 billion consensus estimate.
Non-GAAP diluted EPS rose 4% to $1.15, beating the $1.12 estimate.
The company said reduced U.S. channel inventory weighed on CooperVision and expects that pressure to continue into the fourth quarter.
Cooper guided fourth-quarter EPS to $1.05-$1.09 versus $1.19 analyst estimate and revenue to $1.057 billion-$1.080 billion versus $1.106 billion analyst estimate.
The company also completed its strategic review and decided to retain CooperSurgical. It increased its share repurchase authorization from $ 2 billion to $ 3 billion.
Management Explains Strategic Review and Near-Term Pressure
On the earnings call, CEO Al White said the board unanimously concluded shareholders were “better served by continued ownership than by pursuing a transaction at this time,” following the strategic review.
Management also provided more context on the near-term pressure at CooperVision. White said the company “proactively reduced U.S. channel inventory that weighed on our results and will continue to impact Q4.”
Despite the inventory adjustment, White said U.S. consumption increased at a mid-single-digit rate during the quarter, indicating underlying demand remained stronger than reported sales trends.
Analysts Cut Price Targets
Analysts responded with price-target cuts, while Cooper retains a Buy consensus rating and an average consensus price target of $79.
Baird downgraded Cooper to Neutral from Outperform and cut its target to $61 from $85, while Needham lowered its target to $73 from $86.
JP Morgan maintained Neutral and cut its target to $58, UBS maintained Neutral and lowered its target to $66, and BofA Securities downgraded the stock to Neutral with a $65 target.
COO Technical Outlook: Shares Deeply Oversold
Cooper Companies trades 23.4% below its 20-day SMA of $71.60 and 25.1% below its 200-day SMA of $73.24, reflecting continued pressure on the longer-term trend.
The bearish setup also includes an April Death Cross, with the 50-day SMA below the 200-day SMA, while the 20-day SMA remains below the 50-day.
RSI stands at 15.05, signaling deeply oversold conditions. That could leave shares vulnerable to a short-term rebound, although oversold readings can persist during sustained downtrends.
- Key Resistance: $63.50 — First notable test if shares rebound.
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COO Stock Price Activity: Cooper Companies shares were down 14% at $54.50 at the time of publication on Thursday, according to Benzinga Pro data.
Photo by T. Schneider via Shutterstock
