Cooper Companies (COO): Assessing Valuation After Recent Quarterly Revenue and Net Income Growth

Cooper Companies (COO) shares edged higher in recent trading, drawing attention from investors after the company's latest quarterly results revealed solid revenue and net income growth compared to a year earlier. The stock’s modest gains follow months of mixed performance.

See our latest analysis for Cooper Companies.

After a tough start to the year, Cooper Companies’ share price staged a notable rally in recent weeks with a 10% gain over the past month, though it is still down 17% year-to-date. Even with these short-term gains, its 1-year total shareholder return remains firmly in negative territory at -29%, highlighting that longer-term momentum is still rebuilding after several challenges.

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With shares still trading at a discount to many analyst price targets, investors are left wondering if Cooper Companies is undervalued. Alternatively, the market may already be factoring in all anticipated improvements and growth to come.

Most Popular Narrative: 9.7% Undervalued

Compared to the last close price of $74.99, the most closely followed narrative sees Cooper Companies' fair value at $83, leaving upside potential on the table. This perspective draws on recent improvements and a roadmap for future growth catalysts.

Investments in automation, digital solutions, and integration of recent acquisitions (notably in CooperSurgical and the fertility segment) are coming to fruition, leading to expected operating efficiencies, working capital improvements, and operating margin expansion. These factors are seen as supporting higher future earnings and free cash flow conversion.

Read the complete narrative.

What are the bold forecasts hiding beneath this valuation? The real story features ambitious projections on profit margin expansion and surging earnings. These are numbers that could redefine expectations. Uncover which crucial assumptions drive this outlook and push the fair value well above today's price.

Result: Fair Value of $83 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, slowing momentum in the global contact lens market and mounting pricing pressure could temper Cooper Companies’ upside, presenting real tests to the bullish case.

Find out about the key risks to this Cooper Companies narrative.

Another View: Market Ratios Raise a Warning

Looking from a market ratio perspective, Cooper Companies trades at 36.6 times earnings, making it noticeably pricier than both the US Medical Equipment industry average (29.8x) and its main peers (27.8x). Compared to its fair ratio of 29.6x, this premium suggests investors are betting on stronger performance or bigger future growth than the market expects. Could this optimism be creating a valuation risk, or is there more room for the stock to run?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Cooper Companies Narrative

If the current outlook does not align with your perspective, or you want to dig into the numbers yourself, you can explore and build your own Cooper Companies narrative in just a few minutes. Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Cooper Companies.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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