CooperVision, a unit of The Cooper Companies Inc. (COO), has voluntarily recalled certain lots of its Avaira Toric contact lenses. The recall is based on the presence of a residue on these lenses, which was found following the investigation of a small number of complaints of temporary blurred vision and discomfort.
The California-based company also noted that no other products (other than the specific batches of Avaira Toric) made by CooperVision were involved in the recall.
Copper stated that a resolution of the manufacturing issue is in process and expects shipment of the Avaira Toric lenses to resume shortly and inventory to return to normal levels by December 1, 2011. The company will create a reserve for return of inventory and associated matters, currently estimated to be roughly $14 million.
The Avaira Toric lenses hit the market in April 2010. Avaira Toric, geared to ensure a reliable outcome for a wide range of astigmatic patients regardless of their condition, further reinforce the company’s product mix. According to Cooper, these lenses accounted for less than 1% of its sales in third-quarter 2011. The company is expected to release its results for the quarter on August 31 and provide more details on the recall issue in the earnings call.
Cooper is a global medical products company specializing in a wide range of contact lenses for the vision correction market with a smaller strategic business unit for women’s health. It holds the number three position in the $6 billion global contact lens industry.
Cooper is a leader in the high-margin toric lens market. It offers multiple designs of toric lenses, across a wide range of parameters, unlike some of its competitors, who offer toric lenses in a limited number of designs. The company is benefiting from strong demand for its Biofinity toric lenses.
However, Cooper faces formidable competition in each of its major product lines. Competition comes from globally well established contact lens makers such as Johnson & Johnson (JNJ) and Novartis (NVS). Depressed levels of consumer spending have heightened the competitive pressures on the company. Our Outperform recommendation on the stock is backed by a short-term Zacks #2 Rank (Buy).
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