Cooper Companies (COO) shares rose 7.3% following its Q2 2026 earnings beat, where both revenue and adjusted EPS surpassed Wall Street estimates. Despite this short-term momentum, the stock remains down 18.7% year-to-date and 5.6% over the last year. The article highlights a narrative suggesting the company is undervalued at its current price of $65.91 compared to an implied fair value of approximately $87. The bullish case rests on expectations that free cash flow will increase as capital expenditure cycles wind down following the ramp-up of MyDAY capacity. Management guides for roughly $2 billion in free cash flow over the next three years, driven by strong cost discipline and revenue momentum. This improved cash generation is expected to benefit shareholders through debt reduction and share repurchases. However, significant valuation concerns persist as the stock trades at a P/E ratio of 54.5x, which is substantially higher than its own fair estimate of 32.5x, the peer average of 23.1x, and the industry average of 24.4x. The article notes that investors are paying a premium, raising questions about whether future earnings can support this multiple. Key risks include slower growth in the contact lens market, pricing competition, uncertainty surrounding the transition from Clariti to MyDAY, and softer demand for fertility products and IUDs. While the cash flow outlook is positive, the high valuation multiple suggests the market may already be pricing in future growth or anticipating challenges in these specific segments.