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Cochlear Ltd COH

Rating as of

Morningstar’s Analysis

Valuation
Currency in AUD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Cochlear’s FVE Increased 16% With Emerging Markets Showing More Promise

Shane Ponraj, CFA Equity Analyst

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.

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Company Profile

Business Description

Cochlear is the leading cochlear implant device manufacturer with around 60% global market share. Developed markets contribute 80% of group revenue where cochlear implants are the standard of care for children with severe to profound hearing loss. The company also actively targets the growing cohort of seniors in developed markets. Tender-oriented emerging markets contribute the remaining 20% of group revenue. Main products include cochlear implants, bone-anchored hearing aids, or BAHA, and associated sound processors. In fiscal 2020, 49% of revenue came from the Americas, 35% from EMEA, and 16% from the Asia Pacific segment.

Contact
1 University Avenue, Macquarie University
Sydney, NSW, 2109, Australia
T +61 294286555
Sector Healthcare
Industry Medical Devices
Most Recent Earnings
Fiscal Year End Jun 30, 2021
Stock Type
Employees 4,000

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