Cooper Companies (The)

CooperVision has multiple, mutually reinforcing advantages. Efficient scale and cost advantages: high fixed costs, automation, and validated processes in silicone hydrogel dailies and torics create meaningful barriers; we score this 80/100 and weight it 30%.

Intangibles: brand trust with eye‑care practitioners and a growing evidence base around MiSight support premium positioning; 75/100, weight 20%. Switching costs: moderate for consumers but higher for practitioners who standardize fittings and inventory; 65/100, weight 25%. Network effects: minimal; 10/100, weight 5%.

Regulatory and quality systems: approvals, ISO/QMS and MDR compliance constitute a barrier but require ongoing spend; 70/100, weight 20%.

Weighted across components yields ~72. Durability is strongest in CooperVision; however, the CooperSurgical portfolio’s moat is narrower and recently challenged by quality events and litigation, which trims the consolidated score. FY25 segment data showing CVI margin of 27% vs CSI 3% supports the asymmetry in moat quality.

CooperVision has demonstrated mid‑single digit price/mix gains supported by premium dailies, torics and multifocals and the differentiated MiSight lens, indicating above‑average pricing power. Non‑GAAP gross margin for FY25 was 68% and operating margin 26%, implying room for incremental pricing to offset inflation and tariffs.

CooperSurgical pricing is more mixed, with reimbursement dynamics in genomics and competition in office devices dampening leverage. Overall, we see realized pricing power today and latent upside as MiSight penetration grows, but balance this with regulatory and competitive noise in surgical.

The consolidated business has a moderately predictable base due to recurring lens wear and a broad geography, with roughly half of sales ex‑U.S. Yet predictability is constrained by CooperSurgical’s legal and quality overhangs and its inherently more episodic revenue streams.

FY25 delivered steady revenue growth of 5% and eight consecutive non‑GAAP EPS beats per management commentary, but Q4 GAAP margin was temporarily depressed by reorganization costs. We expect mid‑single digit organic growth to continue for the group, skewed by CooperVision, while surgical variability and litigation outcomes remain the swing factors.

At October 31, 2025, CooperCompanies had total debt of $2.51 billion and cash of $110.6 million. Trailing CFO was $796.1 million with capex $362.4 million, yielding FCF of $433.7 million. Interest expense was about $100 million, covered roughly 6x by GAAP operating income and ~10x on a non‑GAAP basis.

We view leverage as manageable given FCF guidance of $575 to $625 million for FY26 but not low enough to be considered pristine. A $2.0 billion repurchase authorization (with $966 million remaining at FY25 year‑end) offers capital flexibility if cash generation tracks plan.

Track record is mixed. Investments into daily silicone hydrogel capacity and myopia management are high‑return and moat‑accretive. However, CooperSurgical’s rollups (e.g., Generate Life Sciences) and subsequent quality issues in 2023 media lots have diluted returns and introduced legal risk.

Management ended the small dividend in 2023, prioritizing reinvestment and buybacks, and repurchased ~$290 million of stock in FY25 while expanding the authorization to $2.0 billion.

We see improving discipline and a sharper focus following FY25 reorganization and the announced strategic review, but we want more evidence of sustained ROIC expansion and risk control in surgical.

CEO Al White has deep company tenure spanning finance, strategy and operating roles, and the board appointed Colleen Jay as chair effective January 2, 2026. The team navigated FY25 with earnings growth, higher FCF and a strategic review responding to shareholder input.

Execution credibility is solid in vision care; surgical oversight needs continued strengthening given litigation and 2024 internal‑control remediation at CooperSurgical (since remediated in FY25). Overall, leadership is responsive and increasingly focused on value creation, though we remain watchful on surgical risk management.