Analyst Note| Shane Ponraj, CFA |
We raise our fair value for wide-moat Cochlear by 16% to AUD 160 with a more positive view on both pricing and uptake in emerging markets. Management recently confirmed pricing is consistent across regions for its premium products, such as the CI632 implant, and we expect average unit prices will trend upwards as funding and wealth increases in emerging markets. The newly completed China factory has also expanded capacity by roughly 50%, which we think will drive the cost of production lower and enable Cochlear to reinvest more into growing awareness of its products. We increase our forecast five-year emerging markets revenue CAGR to 13% from 5% prior, driving our 9% five-year group revenue CAGR.