COH – UBS rates the stock as Sell

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The broker has no doubt Cochlear remains the quality implant company. However the company is now entering its weakest 4-5 year period of its innovation/product cycle at a time the stock’s PE is as high as its been against the ten-year average as investors seek that quality.

Recipients of the latest N6 implant won’t be able to upgrade to a new device until some time in FY18 or beyond, the broker notes. Meanwhile, the competition has some chance to catch up. Re-appraising earnings and fx hedges sees the broker raise its target to $108 from $92, but that’s still well below the traded price. Sell retained.

Sector: Health Care Equipment & Services.

Target price is $108.00.Current Price is $129.62. Difference: ($21.62) – (brackets indicate current price is over target). If COH meets the UBS target it will return approximately -20% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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