COO

Cooper Companies ($COO) Execs Repurchase $2.29M at $65-82 After Selling at $110+...Strategic Review Signals 'Undervalued' Bet

12/23/2025 21:13

Cooper Companies ($COO) executives made concentrated stock purchases over two consecutive days in mid-December. President Albert White III bought 10,000 shares at $80.80 per share ($808,000) on December 16, while President Holly Sheffield purchased 1,230 shares ($99,322) the same day. Director Lawrence Kurzius followed with 2,000 shares at $82.50 ($165,000) on December 17. Total insider buying over these two days reached $1.07 million. The timing and scale of White's purchases are particularly noteworthy. He sold $12.71 million worth of shares in September 2024 when the stock peaked around $110. Now, with shares down 26% from that level, he invested $808,000. More significantly, he had already purchased $684,000 worth of shares in September 2025 when the price dropped to $68. This marks his second major purchase in four months, signaling strong conviction in a rebound rather than symbolic buying. Insider buying intensified starting in September. Between September 2-29, five executives made concentrated purchases: EVP Daniel McBride invested $195,000, EVP Brian Andrews $100,000, President Gerard Warner III $100,000, President White $684,000, and Director Kurzius $137,000, totaling $1.22 million in September alone. Notably, these same executives sold heavily in September 2024 when shares traded at $105-110. McBride sold $12.13 million and Andrews sold $2.63 million. The same management team buying back after a 50% price decline strongly suggests they view current levels as undervalued. Cooper Companies operates two segments: CooperVision (contact lenses) and CooperSurgical (women's health and fertility medical devices), with a market capitalization of $16.2 billion. CooperVision ranks third globally in the contact lens market after Bausch + Lomb and Alcon, with particular strength in its MyDay product line. CooperSurgical supplies fertility treatment and OB/GYN surgical devices, expanding market share in Europe. The company employs 15,000 people with fiscal 2025 revenue around $4 billion. The aggressive insider buying coincides with the December 4 announcement of a strategic review initiation. The company stated it was launching a formal review to enhance long-term shareholder value, causing shares to jump 10% in after-hours trading. Strategic reviews typically examine options including business separation, M&A, or restructuring, often triggering valuation reappraisal. Activist investor Browning West argued in a November open letter that "the current corporate structure obscures the value of both CooperVision and CooperSurgical" and claimed "separation could more than double the stock price." Browning West, having invested over $500 million, is pressuring for board changes. Another activist, Jana Partners, reportedly built a stake in October. Jana is expected to push for merging CooperVision with Bausch + Lomb and improving capital allocation efficiency. On September 17, the company announced a $1 billion expansion of its share repurchase program, signaling commitment to shareholder returns while responding to activist pressure. Board chair succession was also announced. With multiple activists applying simultaneous pressure, management has little choice but to explore strategic alternatives. Why did shares decline so sharply? The immediate cause is disappointing results. In Q3 results (ended July) announced August 27, revenue of $1.06 billion slightly missed expectations, and annual revenue guidance was lowered to $4.07-4.10 billion versus Wall Street's $4.19 billion estimate (about 2% below). Shares plunged 10% that day. Contact lens demand showed weakness in the US and China, and global contact lens market growth itself slowed from 7% to 4%. March also saw an 8.7% stock drop after Q2 results missed revenue expectations. Financial health itself remains solid. Q3 non-GAAP EPS of $1.10 increased 15% year-over-year, beating analyst estimates of $1.07. Operating margin improved 60bp to 26.1%, and free cash flow reached $165 million. Annual FCF totals $377 million. Debt-to-equity ratio of 33.79% is stable, and net debt declined to $2.35 billion. Bank-defined leverage ratio improved to 1.77x. The issue is revenue growth falling short of expectations. Q3 revenue growth was just 6% (2% organic). CooperVision reached $718.4 million (6% growth but 2.4% organic), while CooperSurgical contributed $341.9 million (4.5% growth but 2% organic). Geographically, Asia Pacific declined 5%, Americas grew 3%, and EMEA grew 6%. E-commerce channel weakness in Asia was particularly pronounced, reflecting China market slowdown and weakening consumer sentiment. By product category, toric and multifocal lenses grew 6% while sphere lenses declined 1%. CooperSurgical's PARAGARD contraceptive device fell 10% after advance purchasing effects from price increases faded. However, the fertility segment showed solid growth, expanding market share in EMEA centered on genomics and consumables. Yet the company indicated in December that fiscal 2026 profit and revenue would exceed Wall Street expectations. While specific numbers weren't disclosed, the market responded positively. The key point is that MyDay product manufacturing constraints have been resolved, restoring double-digit growth. MyDay, a daily disposable silicone hydrogel lens popular for comfort and high oxygen permeability, is seeing surging orders as supply bottlenecks clear. The company expects active MyDay fitting activities to convert to future revenue. The MiSight myopia control lens is also approaching its $100 million annual sales target. For investors, key indicators to monitor are clear. First, specific progress on the strategic review. Any business separation or merger proposal within Q1 would trigger immediate stock response. Second, MyDay's quarterly revenue growth rate. If double-digit growth resumed in Q3, confirming this continues through Q4 and FY2026 Q1 is crucial. Third, demand recovery signals from China and Asia. The inflection point when Asia Pacific shifts from negative to positive growth will be significant. Fourth, whether overall contact lens market growth recovers from 4% back toward 5-6%. Without broader industry momentum recovery, Cooper will continue to struggle. Conversely, warning signs include activist proposals being rejected by the board or the strategic review becoming protracted, which could trigger disappointment selling. If Q4 results (due March 2026) again miss revenue guidance, shares risk retreating to the $60s. If China's economic slowdown persists or US consumer sentiment deteriorates further, discretionary items like contact lenses face headwinds. Aggressive pricing by competitors Bausch + Lomb or Alcon could challenge market share defense. Considering future scenarios, in the optimistic case, CooperVision and CooperSurgical separation is announced in H1 2026, with CooperVision listing independently or entering merger talks with Bausch + Lomb. If combined valuation exceeds 2x current market cap as Browning West claims, shares could reach $150+. If MyDay and MiSight exceed growth expectations and Asia markets recover from Q2, earnings momentum improves concurrently. Valuation rerating could expand forward P/E to 25x, implying a $100-120 target based on current EPS guidance. In the neutral scenario, strategic review takes 6-12 months while results gradually improve. MyDay growth continues but China recovery is slow, with overall revenue growth maintaining 4-5%. Activist pressure expands buybacks and slightly increases dividends, but no dramatic structural changes occur. Shares would trade 10-20% higher in the $90-100 range. The analyst median target of $95.50 aligns with this scenario, with forward P/E converging toward 20-22x industry average. In the pessimistic scenario, the strategic review is abandoned or activist proposals rejected. Q4 and FY2026 Q1 results consecutively disappoint, and contact lens market growth slows further to 3%. China's downturn deepens while US consumption weakness persists, pressuring both segments. Intensifying competition creates pricing pressure and margin compression. Shares could retreat to $60-70. However, given current valuation (forward P/E 18.62x, FCF yield 2.3%), this scenario probability is relatively low given solid financial health and downside support from dividends and buybacks. In conclusion, Cooper's concentrated insider buying reflects management's judgment that current valuation significantly undervalues the business. Particularly striking is that executives who sold at $110+ are aggressively rebuying in the $65-82 range. Clear catalysts exist through the strategic review and activist involvement, supported by strong long-term FCF generation and financial health. However, near-term earnings volatility and demand uncertainty persist. While Browning West's claim of "more than doubling" is optimistic, 30-50% upside through restructuring appears quite realistic. Investors should closely monitor the March Q4 results and strategic review progress, but at current levels, betting alongside insiders may be the rational choice. Consider dollar-cost averaging to manage near-term volatility, with clear stop-loss discipline if shares fall below $60.