Market Overview

3 Reasons Why Cooper Companies Landed A KeyBanc Upgrade

3 Reasons Why Cooper Companies Landed A KeyBanc Upgrade

A bullish case for medical device manufacturer Cooper Companies Inc (NYSE: COO) can now be made for three reasons, according to KeyBanc Capital Markets. 

The Analyst

KeyBanc's Matthew Mishan upgraded Cooper Companies from Sector Weight to Overweight with a new $298 price target.

The Thesis

Investors should have increased confidence in Cooper Companies' ability to grow its business over the coming years — despite a highly competitive environment — for three reasons, Mishan said in the upgrade note. (See the analyst's track record here.) 

  • KeyBanc's proprietary checks suggest an improvement in demand from growth that was below average at the start of 2018 but is now more in-line with peers, particularly in its daily contact lens portfolio, the analyst said. 
  • Cooper's underlying soft contact lens market remains healthy, and the company could account for a 10-20 percent global market share opportunity by 2022 from the higher-priced daily lenses from multiweek or monthly, Mishan said. Over the same time period, the company should be able to sustainably grow its business at a rate of 7 percent or more, above the market average, he said. 
  • Finally, Cooper continues to make necessary investments to support its long-term growth profile, which is notable, as many of its peers don't have readily available capital to keep up with Cooper, the analyst said. For example, the company is investing in improving relationships with eye care professionals and developing less commoditized specialty lenses, extended ranges and new technologies like myopia control.

Price Action

Cooper Companies shares were set to open 0.83 percent higher at $256.09 Monday. 

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Latest Ratings for COO

Sep 2020Raymond JamesMaintainsOutperform
Sep 2020Stephens & Co.MaintainsOverweight
Sep 2020OppenheimerMaintainsPerform

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