What? Cochlear Limited (ASX: COH) shares surged 5% in trade on Wednesday morning, against a 0.5% fall in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
What Happened? Investors will be pleased to know that they haven't missed anything of note. There were no announcements by the company, no notable news released in the media and nothing major from the company's competitors. An interesting story overnight was the initiation of a project called Hearing Aids for Music. The project aims to "look at how people use hearing aids in musical situations, from listening to music at home to going to a symphony or rock concert."
I doubt this will have much impact on shareholders though, seeing as music is probably a secondary reason why someone would take up a hearing implant.
The surge could have to do with the fact that the Australian dollar fell heavily overnight. At the end of the day though, investors took the opportunity to buy a quality company at a good price.
What now? For current investors, it's a case of nothing to see here. A company like Cochlear will see share price rises and falls relatively often because of its heavy exposure to overseas currencies. An example of this was a 10% fair-value increase from one analyst as a result of a lower Australian dollar assumption.
Analysts expect Cochlear to report earnings of 290 cents per share and a dividend of 205 cents per share for the 12 months to 30 June 2015, representing an increase of 50% on the year before. 2016 is expected to be more subdued as the majority of analysts predict earnings growth of between 10% and 15%.
Healthcare stocks look pricey, so investors should prepare to buy during any period of share price weakness. How you act in a share market crash can have a huge impact on your performance over the long term!
