The Cochlear (ASX:COH) share price has surged nearly 30% in 2021

This comes after the medical recently hit a 52-week high.

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The Cochlear Limited (ASX: COH) share price has surged more than 29% since the start of the year. Following a tough 2020, Cochlear has been one of the standout performers in the S&P/ASX 50 Index (ASX: XFL) for 2021.

A strong half year report and pipeline of demand have seen investors clamour for shares in the company. Read on to find out more on the Cochlear share price.

What's been driving the Cochlear share price?

After a tumultuous 2020, shares in Cochlear have burst out the blocks in 2021 having recently hit a new 52-week high.

Despite the company not releasing any price-sensitive news, a promising half year report and a strong recovery potential could be what's driving investors to the company.

For the 6 months to December 31, Cochlear recorded a 2% fall in total revenue to $743.2 million, while underlying net profit climbed 4% to $125.3 million.

Although Cochlear reported an 8% slide in sales revenue in the first quarter of FY21 2021, sales rebounded strongly in the second quarter, up 7% on a constant currency basis.

Cochlear attributed the performance to varying degrees of growth across established and emerging markets. The better than expected result saw Cochlear return the government funding it had received as part of JobKeeper. In addition, Cochlear resumed paying dividends, declaring a $1.15 dividend, representing 60% of underlying profits.

What is the outlook for Cochlear?

Cochlear and the hearing implant sector were hit hard during the COVID-19 pandemic as elective surgeries ceased globally. Despite a sudden decline, implant surgery rates began to recover late last year.

As a result, Cochlear forecasts that it will achieve an underlying net profit for FY21 between $225 million and $245 million. This forecast reflects a 46% to 59% increase on last year's FY20 result.

Cochlear noted that a successful rollout of COVID-19 vaccines will see elective surgeries return to their pre-pandemic levels. The company noted that implant surgery rates have bounced back strongly in developed markets.

The recovery in emerging markets such as India and Brazil is expected to be more protracted. Emerging markets account for 20% of Cochlear's sales revenue. However, multiple strains and rising COVID cases are expected to subdue the recovery.

Cochlear hopes to return to its historical 70% dividend ratio in the near future and expects that the implant market will return to normal growth in financial year 2022-23.  

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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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