Cooper Companies Third Quarter Good, Not Great, Says BMO

Cooper Companies Inc (NYSE: COO) reported its third-quarter results after Thursday's market close. The company said it earned $2.30 per share in the quarter on revenue of $514.7 million, exceeding the $2.29 per share and $511.8 million Wall Street analysts were expecting.

According to Joanne Wuensch of BMO Capital Markets, the medical device company's results were "somewhat better than expected" but "may not be enough" given the stock's 38 percent gain since the start of 2016.

Wuensch noted that Cooper Companies' gross margins expanded to 63.6 percent in the quarter from 62.4 percent in the same quarter a year ago. The analyst added that the company expects gross margins to read around 63 percent for the full year and this metric is the "most important factor in reaching operating leverage" given the company's U.K. manufacturing base.

Over the longer term, Wuensch is modeling Cooper Companies' gross margin to rise to 65.0 percent in 2017, but other Wall Street analyst "may have been more aggressive" in their respective expectations and timing.

Finally, the company didn't provide any 2017 guidance but did note there is a six-month lag to the effect of the British pound, and this won't impact its P&L until January 2017.

Bottom line, Cooper Companies' earnings report were essentially "good" but not "great great" and the analyst is "looking forward to next year."

Shares remain Outperform rated with a price target raised to $206 from a previous $199.

Full ratings data available on Benzinga Pro.