Cochlear (COH) – Implants over upgrades

Cochlear provides implantable hearing solutions for children and adults worldwide. It offers cochlear implant systems, sound processor upgrades, bone conduction systems, accessories, and other products. The company was founded in 1981 and is headquartered in Sydney.

Ord Minnett has reviewed the outlook for Cochlear following the release and US regulatory approval of its Nucleus Nexa platform, leading us to forecast cochlear implant volume growth of 14% and 17% in FY26 and FY27, respectively. This expectation, in turn, reinforces our view that Cochlear can boost its market share to 74% by FY27 from 65% currently. The Nexa system will drive new implant volumes even as processor upgrades look sluggish, although the scheduled January 2026 obsolescence of the Nucleus N7 processor, which has been in circulation since 2017, should provide a bump to FY26 services segment revenue, as will the release of the Kanso 3 off-the-ear processor. Overall, we still expect services revenue to fall by 2% in FY26 and 6% in FY27, which leaves us below broader market expectations.

Post our review, we have trimmed our FY25 EPS estimate by 0.1%, while our FY26 and FY27 forecasts increase 3.1% and 3.7%, respectively. This leads us to raise our target price for Cochlear to $295.00 from $285.00. We maintain our Hold recommendation, however, as the company’s investment attractions, i.e. an oligopolistic market dominated by Cochlear, a large addressable market, and technological advantages, are already priced into the stock.

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