The Cooper Companies, Inc. (NASDAQ:COO) cut its fiscal 2026 profit and revenue forecasts after weaker-than-expected demand for contact lenses weighed on its CooperVision business. The company now expects adjusted earnings of $4.51–$4.55 per share, down from its previous forecast of $4.58–$4.66, while revenue guidance was reduced to $4.23–$4.25 billion from $4.29–$4.32 billion. Third-quarter revenue came in at $1.07 billion, below Wall Street’s $1.10 billion estimate, although adjusted EPS of $1.15 beat expectations.
The weakness was concentrated in CooperVision, where revenue fell to $717 million. Cooper said a reduction in U.S. channel inventory hurt results and is expected to continue affecting the fourth quarter. At the same time, the company completed its strategic review and decided to retain CooperSurgical rather than sell the business.
CooperVision Could Regain Momentum
The biggest bullish argument is that some of the current weakness may be temporary rather than a fundamental deterioration in the contact lens market. The Cooper Companies, Inc. specifically pointed to U.S. channel inventory reductions, meaning part of the sales pressure reflects distributors and customers working through existing stock rather than consumers permanently abandoning contact lenses. If inventories normalize, CooperVision could see a recovery in sales growth.
Cooper also continues to have a strong position in the global contact lens market. The company is investing in new products, expanding CooperVision’s sales and marketing organization and improving inventory and logistics operations. Its strategic review also identified opportunities to reduce costs and improve operational efficiency.
There are encouraging signs beneath the weak headline numbers. Adjusted third-quarter EPS still increased 4% year over year to $1.15, while free cash flow jumped 66% to $273 million. The Cooper Companies, Inc. also increased its share-repurchase authorization from $2 billion to $3 billion, giving the company another way to support per-share earnings if the stock remains depressed.
The company is also maintaining its long-term free-cash-flow objective of more than $2.2 billion from fiscal 2026 through 2028. That gives the bull case some financial support even if near-term contact lens demand remains soft.
Persistent Demand Weakness Threatens Earnings
The immediate concern is that the slowdown is broader than a simple inventory correction. CooperVision’s third-quarter revenue was weaker than expected, and management expects the pressure to continue into the fourth quarter. The company is now forecasting CooperVision organic growth of just 1%–2% for fiscal 2026, while fourth-quarter CooperVision organic growth is expected to range from -2% to 0%.
The guidance reduction also leaves The Cooper Companies, Inc. meaningfully below its earlier growth expectations. The company began fiscal 2026 expecting total revenue of roughly $4.30 billion–$4.34 billion, but the latest forecast is down to $4.23 billion–$4.25 billion. That suggests investors may need to lower their expectations for the company’s near-term growth trajectory.
Another concern is the decision to retain CooperSurgical. Investors had been looking at a potential sale as a way to simplify the company and unlock value. Keeping the business means Cooper will continue to operate two distinct businesses instead of potentially becoming a more focused contact-lens company. Barron’s noted that the decision disappointed investors, contributing to the sharp selloff in the shares.
There is also a risk that weaker demand lasts longer than management currently expects. If contact lens sales remain sluggish while CooperSurgical continues to require capital and management attention, earnings growth could remain limited, and the stock could face further pressure.
Conclusion
The Cooper Companies, Inc.’s outlook has clearly weakened in the near term, with lower contact lens demand, inventory reductions, and reduced full-year guidance creating a tougher earnings environment. The decision to retain CooperSurgical also removes a potential near-term catalyst that investors had been anticipating.
Still, the bear case is not necessarily a structural breakdown in the business. Strong free cash flow, improving adjusted profitability, a sizable buyback authorization, and CooperVision’s investments in new products and commercial execution give the company several levers to recover.
The key question is whether the contact lens weakness is mainly an inventory-driven slowdown or evidence of a more persistent demand problem. If inventories normalize and CooperVision returns to stronger growth, the recent pressure could prove temporary. If weak demand continues into 2027, the reduced guidance could be the beginning of a longer earnings reset rather than a one-quarter setback.
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This article is originally published at Insider Monkey.
