The S&P/ASX 200 Index (ASX: XJO) giant was hit hard by the onset of the COVID-19 pandemic. But now Australia is getting closer to normality once more, are Cochlear Limited (ASX: COH) shares worth buying?
Tribecca Investment Partners portfolio manager Jun Bei Liu thinks so.
The fundie believes the company is set to be a market beater, outperforming its competition and ASX 200 peers over the long term.
As of Thursday's close, the Cochlear share price is $229.14. That's 0.26% higher than it was at the end of Wednesday's session.
Let's look at why this professional recommends Cochlear shares.
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Are Cochlear shares worth buying?
Like many ASX shares, Cochlear's stock was hit hard by COVID-19.
Cochlear ultimately withdrew its guidance for financial year 2020 as the pandemic impacted its business. It later launched an $800 million capital raise to cover the resulting drop in income.
Come the end of financial year 2020, the company recorded an 11% drop in revenue on a constant currency basis, mainly due to restrictions on surgeries.
But looking beyond the pandemic, is Cochlear a buy?
Cochlear is a global leader in implantable hearing devices, and that's exactly why Liu believes it's one to buy now and hold for the future.
It currently holds more than 60% of the hearing device market, according to Liu. Additionally, she expects that market to grow as the global population ages.
Liu told LiveWire another reason she thinks Cochlear shares are a buy is because the company works in an under-penetrated market – only 60,000 people receive implantable hearing devices each year.
That leaves the company with a strong growth pathway for the next 10 years.
Additionally, there are few technological advances that could see its products deemed obsolete. In fact, Cochlear is mostly only at risk of itself. Livewire quoted Liu as saying:
Cochlear is the most advanced with a fully implantable device which is likely to be the next major development in the space.
Finally, Liu likes Cochlear for its management team. She believes they are capable and focused on driving the company's value higher over time.
However, its current value is a slight downside. Liu reportedly said:
As a high-quality business with defensive structural growth characteristics, the stock is trading at a meaningful premium to the rest of the ASX companies. Taking a longer-term view, however, Cochlear is absolutely a bottom drawer stock that will deliver growth year in and year out.
