Cochlear Limited (ASX:COH) holds its AGM: Should you invest?

Is the Cochlear Limited (ASX:COH) share price in the buy zone after the release of its AGM update?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Cochlear Limited (ASX: COH) share price has pushed higher this morning following the release of its annual general meetings presentation.

In late morning trade the hearing solutions specialist's shares are up almost 1% to $187.00.

What was in the presentation?

As well as looking back at its strong performance in FY 2018, the company reminded investors of its sizeable market opportunity.

According to the presentation, it feels that hearing loss is both prevalent and under-treated. The company estimates that there are 15 million people globally that could benefit from a cochlear or bone conduction implant.

Based on current industry sales, this means that implantable hearing solutions have penetrated less than 5% of the total addressable market.

As a result, one of the company's strategic priorities is to grow the hearing implant market. It intends to achieve this by growing awareness, improving market access, and providing clinical evidence.

Another strategic priority that Cochlear has is retaining its market leadership. One way it hopes to achieve this is through its market-leading products.

Which is why I think last week's announcement is a pretty big deal. Last week Cochlear advised that it has commenced a clinical feasibility study to evaluate a totally implantable cochlear implant technology.

While the technology is complex and a commercially available product is not expected for years, I believe it has the potential to be a game-changer if it is eventually released. If it is first to market with the technology it should allow the company to maintain its position as the market-leader for a long time to come.

What about FY 2019?

In August Cochlear announced that it expects to deliver a reported net profit of $265 million to $275 million in FY 2019. This will be an 8% to 12% increase year-on-year.

Management retained this guidance this morning. It advised that this is expected to be driven by "continued growth across the developed markets, which represent around 80% of cochlear implant revenue." In addition to this, it has forecast strong growth from emerging markets.

Should you invest?

While this level of growth may not seem like enough to justify the multiple that its shares trade at, I believe its strong long-term growth potential goes some way to doing so.

In light of this, I continue to see it as a great buy and hold investment option along with ResMed Inc (ASX: RMD) and CSL Limited (ASX: CSL).

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Cochlear Ltd. and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers

a man sits back from his laptop computer with both hands behind his head feeling happy to see the Brambles share price moving significantly higher today
Industrials Shares

Up 39% in a year, is there more growth to come for this ASX 200 share?

IML Equity Analyst Josh Freiman shares his views on a major ASX 200 industrial stock.

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Catapult, Flight Centre, Nufarm, and Xero shares are storming higher today

These shares are having a strong session on Thursday. But why? Let's find out.

Read more »

drug capsule opening up to reveal dollar signs signifying rising asx share price
Healthcare Shares

3 ASX healthcare shares going gangbusters on Thursday

Investors are sending these ASX healthcare stocks soaring today. But why?

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX 200 made it three-for-three losses in a row this Wednesday.

Read more »

A young woman wearing overalls and a yellow t-shirt kicks one leg in the air showing excitement over the latest ASX 200 shares to hit 52-week highs
Share Gainers

Why Brickworks, James Hardie, Megaport, and OFX shares are charging higher today

These shares are having a good time on hump day. But why?

Read more »

Fancy font saying top ten surrounded by gold leaf set against a dark background of glittering stars.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors endured another day of selling this Tuesday.

Read more »

Man pointing at a blue rising share price graph.
Technology Shares

Guess which ASX 300 tech stock is already up 64% in November!

The ASX 300 tech stock is surging higher this month. But why?

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Share Gainers

Why ANZ, Block, Neuren, and Pilbara Minerals shares are pushing higher today

These shares are having a solid session on Tuesday. But why? Let's find out.

Read more »