Cochlear shares dive after softer-than-expected result
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More news: Cochlear shares plunged 8.4% to $309.54 in early trading after a softer-than-expected full-year result from the hearing implants maker.
Jarden analysts said that while softer emerging market demand weighed on earnings, services revenue was the biggest disappointment, coming in 6.1% behind its estimates, while FY25 guidance was "weaker than expected".
Likewise, RBC Capital Markets analyst Craig Wong-Pan said he expected Cochlear's earnings miss, weaker outlook for services revenue and "disappointing" FY25 NPAT guidance to "weigh on the stock today".
ECP Asset Management partner, investments, Andrew Dale said while the company posted a "solid" NPAT result it might fall short of market expectations and that guidance appeared "relatively soft".
What they said: "We think market expectations got ahead of [Cochlear] and whilst still delivering good growth and investing for the future, it will likely come under pressure today," Jarden analysts said.
Dale said: "We think the real focus for this stock is the longer-term opportunities to sell more into the very underpenetrated elderly market where growth opportunities are endless given the occurrence of hearing related problems".
"Cochlear is one of the highest quality medical device companies with the best long-term runway for growth in the market," he said.
Cochlear meets upgraded FY profit guidance, misses forecasts
The news: Hearing implant manufacturer Cochlear met its upgraded underlying profit guidance for the 2024 financial year, but failed to reach analysts' optimistic forecasts.
The numbers: Cochlear reported underlying net profit of $386.6 million for the year, up 27% year on year. This came in at the lower end of its underlying profit guidance of between $385 million and $400 million, which was upgraded in February, but fell short of estimates by 11 analysts polled by Visible Alpha (VA) who expected a total of $400.2 million.
The result was aided by a 15% increase to sales revenue year on year, which grew to $2.258 billion. Sydney-based Cochlear, which manufactures implantable hearing devices, saw sales of its cochlear implant units rise 9% year on year to 48,040.
The company declared a final dividend of $2.10 per share, up 20% compared to a year earlier, but below consensus forecasts of $2.19. It set underlying net profit guidance of between $410 million to $430 million in FY25, representing a 6% to 11% increase on FY24.
The context: Cochlear said it experienced strong growth in the US and Western Europe over the year, driven by market growth and share gains following the launch of Nucleus 8, which the company describes as the world's smallest behind-the-ear sound processor.
Implant growth has been strongest in the senior's segment, Cochlear said, with increasing confidence that initiatives to strengthen the referral pathway for adult cochlear implant candidates are having an impact. Cochlear noted that the "ongoing emergence of the digital savvy senior" has opened new communication pathways leading to increased awareness.
Meanwhile strong sales growth in emerging markets during the first half were offset by a decline in the second half. Cochlear said it saw strong growth in China, Brazil and central and eastern Europe, with declines in India and Argentina due to a combination of the timing of tenders and the impact of political and economic conditions.
The source: ASX announcement
