COO: CSI Sale Likely Moving Ahead w/ Financial Buyer - FY26 Growth Outlook Lowered & EPS Guide Maintained

Research evidence excerpt

COO: CSI Sale Likely Moving Ahead w/ Financial Buyer - FY26 Growth Outlook Lowered & EPS Guide Maintained

ower EPS dilution - deal likely to drive higher valuation Prior NC 1.10 E 1.19 E 1.23 E NC

for RemainCo. While our analysis points to LDD EPS dilution, we expect COO to strive to 2027E 1.18 E 1.25 E 1.28 E 1.29 E 5.00 E

outperform, likely through SG&A leverage. On valuation, COO is trading at ~12x forward Prior 1.17 E 1.21 E 1.29 E NC 4.97 E

P/E vs. ~17x for ALC. After separation, RemainCo is likely to narrow to the discount to Source: Company Data, Wells Fargo Securities estimates, and Factset.

ALC to trade at a higher multiple. Applying a 16x multiple to remaining COO's FY27 EPS NA = Not Available, NC = No Change, NE = No Estimate

yields stock price of ~$70 vs. today's $62.02 for total COO.

Larry Biegelsen

Equity Analyst | Wells Fargo Securities, LLC

Lower our PT to $65 (from $82) based on ~13x (from 16.5x) our CY27E EPS of $5.09. Lawrence.Biegelsen@wellsfargo.com | 212-214-8015

Revenue beat drove FQ2 EPS upside. COO reported FQ2 EPS of $1.21, beating Lei Huang

consensus and our est. of $1.10. Upside vs. our model reflected higher revenue and gross Associate Equity Analyst | Wells Fargo Securities, LLC

Lei.Huang@wellsfargo.com | 212-214-8039

margin (68.1% vs. our 67.5% est), and lower non-op exp ($17MM vs. our $21MM est).

FQ2 total revenue of $1.08B (+5% organic yr/yr) came in ahead of consensus and our est Nathan Treybeck

of $1.06B, reflecting upside in both CVI and CSI performance. Equity Analyst | Wells Fargo Securities, LLC Nathan.Treybeck@wellsfargo.com | 212-214-8042

Simran Kaur

CVI performed in-line while CSI outperformed. CVI sales grew 4% yr/yr (in-line w/ our Equity Analyst | Wells Fargo Securities, LLC