UBS upgrades Cochlear to 'buy' after new product launch
Make us a preferred source
Make us a preferred source on Google
The news: UBS has upgraded its rating on hearing implant company Cochlear, expecting new product releases to support higher-than-expected earnings growth over the medium term.
The numbers: UBS upgraded Cochlear from 'neutral' to 'buy' and hiked its 12-month price target from $285 to $325.
Cochlear shares last closed at $281.66.
UBS analysts said the company's new implant portfolio should boost its global market share and lift its three-year implant revenue compound annual growth rate to 10%.
They also expect Cochlear's services revenue to lift by 40% over the next three years, underpinned by 26% growth in installed implant units and a recovery in sound processor replacement rates, helped by upgrades to the company's new Kanso 3 off-the-ear sound processor.
The context: Cochlear shares fluctuated last week after the company downgraded its full-year guidance but announced the launch of its new upgradeable implant system, Nucleus Nexa.
UBS analysts said the release of Nucleus Nexa in Europe and Asia Pacific this month could increase Cochlear's implant market share by 3 percentage points to 63% by fiscal 2028.
The source: UBS research
