Shares of Cochlear Limited (ASX: COH) are inching forward on Thursday to trade 56 basis points higher at $225.98.
After a swift recovery in March, where shares thrust off a bottom of $190 – from $182 in January as well – Cochlear is now trading 4% higher this year.
Is Cochlear a buy?
Analysts have turned more constructive on the company since it released its first half results earlier this year.
Since then, the number of brokers advocating to buy Cochlear has surged to 42%, in line with the percentage of holds.
Still, almost 16% of coverage reckons to sell the stock right now, with RBC Capital Markets pricing a $149 per share valuation on Cochlear.
However, despite the balanced view, Cochlear is trading above its consensus price target of $221.18 apiece.
Analysts at JP Morgan were clearly impressed by the company's latest earnings, noting the "strong result signals [its] growth story [is] clearly intact," in a recent note.
"Cochlear reported a strong first half as European and emerging market implant volumes recovered, despite headwinds from multiple COVID waves," it said.
"The result was also supported by a sharp lift in Services revenue as upgrades lifted as well as very strong Acoustic sales growth. This result signals the recovery is now broad-based, with the pandemic headwinds now manageable confirming the resilience of the growth story," the broker added.
Given its performance, JP Morgan has now dampened its concerns surrounding the maker and researcher of cochlear implant systems.
However, valuation remains a concern, and with some foreseeable challenges ahead, the broker is comfortable on the sidelines at a neutral rating.
"Cochlear's key markets have recovered more rapidly than we had feared given this results strong beat…we think the company is well positioned to return to its strong historical growth profile," it noted.
"While the medium-term outlook remains compelling with the stock trading at its 5 year average [price to earnings] P/E and with limited upside to our DCF-based price target, we have retained our neutral rating (June 2022 price target lifted to $223 from $207)."
