Cochlear (ASX: COH) is the global leader in the provision of hearing implant devices, and sales growth prospects look solid. It has a large global presence, with direct operations in over 20 countries and products sold in over 100 countries.
Fluctuating foreign exchange rates have impacted the business, and the Australian dollar's recent fall has seen the share price recover from a profit downgrade at the end of June.
Cochlear's main opportunity for sustainable growth comes through the large unmet clinical markets for its products across the world. Emerging markets, particularly two of the world's most populous countries, China and India, remain a focus.
The profit premium here is lower than in its main market, the United States, but the potential for sales growth is greater. Furthermore, the company's competitive advantage — having the best technology going — has allowed it to dominate the global market in recent years.
To maintain or even increase this advantage, the business continues to invest heavily in research and development. One such product developed as a result of this investment is its latest implant device, the Nucleus N6. Recently launched after having been in development for over six years, the success of this device could be crucial to the company's 2014 performance.
The N6 is said to be the start of a new range of products to be launched in the coming year, based on the latest sound processing technologies.
The company relies on investment in new technologies and innovations to translate into greater profits and sales. At today's prices, a P/E ratio over 26 is demanding, however a dividend yield in the region of 3.8% provides some reliable income.
Foolish takeaway
The fundamentals for the business remain strong and investors will hope new technology means 2014 brings strong all-round results with it. Those bearish on the Australian dollar will also find the business of particular interest.
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Motley Fool contributor Tom Richardson owns shares in Cochlear.
