Some on Wall Street are casting a jaundiced eye at Cooper Cos., which is shifting its headquarters from Lake Forest to Pleasanton.
Earlier this month, Cooper’s shares were downgraded by an analyst who warned that the company’s profits could fall in the next 12 months as it sells more daily contact lenses and fewer profitable products.
Cooper’s shares fell 5% on Oct. 9,the day the report came out,giving it a recent market value of $2 billion.
JP Morgan analyst Michael Weinstein downgraded the maker of contact lenses and women’s surgical products to “underweight” from “neutral.” In a note, Weinstein said Cooper could earn $114.2 million through next October, down from a previous estimate of $129.9 million.
Weinstein’s new estimate includes $6.2 million in litigation costs, which he said are a recurring item for Cooper.
With its long-delayed Biofinity line, Cooper is moving toward silicone lenses,which have lower profits than toric lenses that are not perfectly round and can be used to correct more serious eye conditions. But even in that arena competition is increasing, Weinstein said.
Cooper is planning to bring Biofinity to market in 2008, along with a daily version of ProClear and a separate silicone lens that can be worn for two weeks, Weinstein said.
Last month, new Chief Executive Robert Weiss said Cooper would be “de-emphasizing OC” and transferring most of its primary functions to Pleasanton, where he and other key officials are based.
Weiss replaced longtime Cooper leader A. Thomas Bender,who worked from Lake Forest,as chief executive on Sept. 1.
Ensign Updates IPO
Ensign Group Inc., a Mission Viejo nursing home and rehabilitative care company, is increasing the amount it plans to raise in its upcoming initial public offering.
Ensign now expects to raise $101.2 million, up from a previous figure of $95 million, according to a Securities and Exchange Commission filing.
Ensign is planning to offer 4 million shares at $20 to $22 a share. A date hasn’t been set for the offering. When the shares go out they will trade on the Nasdaq exchange under the ticker “ENSG.”
The company is profitable,it earned $9.8 million in the six months through June, though that was a 9% drop from a year earlier.
Revenue in the period grew 17.2% to $198.2 million versus a year ago.
D.A. Davidson & Co. of Great Falls, Mont., and Stifel Nicolaus & Co. of St. Louis are underwriting Ensign’s offering.
Ensign would be the second OC nursing home chain to go public this year. In May, Skilled Healthcare Group Inc. of Lake Forest earned $258 million in its IPO. But that enthusiasm didn’t stick with the company as Skilled’s shares are basically flat with their opening price carrying a market value of $592 million.
Ensign, founded in 1999, has 60 facilities and 5,435 workers in California and five other states. The company also isn’t afraid of confrontation: Federal filings say it’s been a target of “a negative labor campaign by at least one labor union, the Service Employees International Union and its local chapter based in Oakland.”
Ensign said it’s been a target of a corporate campaign “because unlike many other companies in our industry, we continue to assert our right to inform our employees about our views of the potential impact of unionization upon the workplace generally and on individual employees.”
Cortex Hits Setback
Cortex Pharmaceuticals Inc. felt the wrath of Wall Street earlier this month.
Investors hammered the Irvine drug developer, sending its shares down more than 60% on Oct. 11 after a regulatory setback. The company had a market value of about $30 million last week.
Cortex said that the Food and Drug Administration’s psychiatric division rejected its request to run a second-phase clinical trial on its CX717 drug because of toxicity issues. Cortex had been testing CX717 for treating attention deficit hyperactivity disorder.
The company pulled its application for the drug to be used for attention deficit hyperactivity disorder.
Cortex is planning to continue developing CX717 for other disorders, such as Alzheimer’s disease and respiratory depression.
While the FDA’s decision “represents a significant setback for the company,” Cortex has a pipeline that is producing other future clinical drug candidates, the company said.
Cortex has had several issues with CX717 in recent months. Last year, clinical trials for the drug were suspended.
Bits and Pieces:
FMR LLC, the parent company of Fidelity Investments, has cut its stake in Advanced Medical Optics Inc. FMR, in a Securities and Exchange Commission filing, said it now has an 8.32% stake in the Santa Ana contact lens care and eye surgery company. FMR previously reported about a 15% stake in the company … Alacrity Biosciences, a Laguna Hills maker of eye drugs, said its ALTY-0501 dry eye treatment candidate showed in a clinical study that it protects the eye’s surface following exposure to a stressful, drying environment, as well as reducing symptoms UCI Medical Center opened the Center for the Medical Treatment of Stuttering earlier this month at its campus in Orange. The center is dedicated to improving patients’ speech fluency through pharmacologic and potential biologic treatments Universal Care Medical Group, Bristol Park Medical Group, Edinger Medical Group, Greater Newport Physicians Medical Group and Southern California Permanente Medical Group-Orange County were recently honored by the Integrated Healthcare Association. Universal Care won an award for pay-for-performance quality measures, while the other four groups where honored for achieving top 20% scores in its doctor incentive program.
