Cochlear (COH) – Sound business

Cochlear provides cochlear implant systems, sound processor upgrades, bone conduction systems, accessories, and other products. The company was founded in 1981 and is headquartered in Sydney.

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Cochlear downgraded FY25 earnings guidance by around 4%, pointing to a higher-than-expected decline in services revenue following two years of strong growth.

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The bionic ear manufacturer said it expected services revenue to return to growth in FY26, driven by new customers and introduction of its new off-the-ear Kanso® 3 Sound Processor.

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The company also launched its Nucleus Nexa System, a smart cochlear implant system that allows firmware to be upgraded via both the implant and sound processor, and internal memory which can store patient information allowing easy switching to new sound processors. The system will launch in Asia-Pacific and Europe this month, with other markets after that pending regulatory approval.

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Cochlear business is in a strong position, bolstered by a total addressable market for cochlear implants that is expected to hit almost US$5 billion ($8 billion) by 2030, high barriers to entry due to technology requirements and the industry’s oligopolistic structure, and its competitive advantage in terms of product.

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These appealing attributes are already discounted in the Cochlear share price, however, leading us to maintain our Hold recommendation and target price of $285.00.

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