A strong first half for Sonova suggests to Citi there may be some downside risk for Cochlear’s earnings assumptions. The broker assumes a significant speech processor upgrade cycle through FY15 and cochlear implant sales growth of 7% in the US
Nevertheless, the stock is considered expensive in both absolute and relative terms and, if market share losses continue, the risk is to the downside, in the broker’s opinion. A Sell rating and $53.21 target are retained.
Sector: Health Care Equipment & Services.
Target price is $53.21.Current Price is $71.45. Difference: ($18.24) – (brackets indicate current price is over target). If COH meets the Citi target it will return approximately -34% (excluding dividends, fees and charges – negative figures indicate an expected loss).