It's been a pretty awful day for the S&P/ASX 200 Index (ASX: JXO) and most ASX 200 shares so far this Tuesday. At present, the ASX 200 has slid by 0.52% and is back to around 7,585 points. But it's been far worse for the Cochlear Limited (ASX: COH) share price.
Cochlear shares are having a horrid day. This ASX 200 healthcare stock and medical device manufacturer closed at $308.45 a share yesterday. But this morning, Cochlear shares opened at $301.74 and are currently down a significant 5.55% to just $291.33 a share.
So what's going on with Cochlear shares this Tuesday that has elicited such a dramatic, and market-trailing, loss for investors?
Image source: Getty Images
Why has this ASX 200 healthcare stock just tanked 5%?
Well, unfortunately, we can't know for sure. There has been no news or announcements out of Cochlear itself today that might explain this sizeable share price drop. Indeed, we haven't seen any fresh news out of the company since 12 January.
However, there has been some other news out today that might be playing a role here.
According to reporting in The Australian, an ASX broker has dramatically downgraded its opinions on Cochlear shares.
As reported, broker UBS has lowered its rating on Cochlear from neutral to sell. The broker has also reduced its share price target for the company by 7.7% to $240 a share. If realised, this would see the Cochlear share price lose another 17.7% from where the company is currently trading at.
Here's what UBS analyst Laura Sutcliffe was quoted as saying to explain this move:
The market seems to be ignoring the possible impact to Cochlear's implant sales from a potential vaccine against CMV [cytomegalovirus], a virus transmitted in utero that accounts for an estimated 20 per cent of childhood deafness… Our work with experts suggests a good chance of success, meaning 5-6 per cent of our prior Cochlear revenue estimates could be at risk.
This could well be what has spooked investors today. A long-term threat to Cochlear's business model is obviously not something that shareholders relish. Even if this vaccine news leads to better outcomes for humanity, investors have to value Cochlear's financials above everything else.
Cochlear share price snapshot
Despite today's chunky sell-off, the Chochlear share price has remained a fairly lucrative investment for anyone who has held the company for longer than a few months. At today's pricing, Cochlear remains up a healthy 32.3% over the past 12 months, and up 46.5% over the past five years.
At the current share price, Cochlear is trading with a market capitalisation of $19.96 billion and a dividend yield of 1.13%.
