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Why the Nuheara Ltd share price rocketed 26% higher today

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One of the best performers on the market on Friday has been the Nuheara Ltd (ASX: NUH) share price.

In morning trade the hearing solutions company’s shares are up a massive 26% to 12.5 cents.

What happened?

This morning Nuheara announced that it has successfully registered as an approved supplier to the Australian Government’s Hearing Services Program (HSP).

The HSP allows eligible Australians access to free and subsidised hearing devices and related services. During the 2017-18 Federal budget the HSP was allocated $539 million of funding. This is expected to rise to $566 million for 2018-19.

According to the release, there are 3 million people in Australia that have some form of hearing loss. Approximately 70% of these people fall into the mild to moderate hearing loss category which Nuheara is targeting with its IQBuds devices.

IQBuds are wireless earbuds which allow consumers to augment their hearing according to their personal hearing preferences and connect hands free with their voice-enabled smart devices. Through this device the company aims to improve people’s lives by allowing them to seamlessly listen, communicate, and connect to their physical and digital worlds.

Management believes that the registration of Nuheara as a supplier to the HSP is a significant development for the company and demonstrates that its innovative hearing solutions have been recognised as a cost-effective option by the Australian Government.

Should you invest?

While I think this is a very promising development and could be the catalyst to a significant lift in sales, it is worth noting that it is a highly competitive market and the list of devices that are included on the HSP is ten pages long.

In light of this, I would hold off investing until there is a notably lift in sales. In the meantime, fellow hearing solutions company Cochlear Limited (ASX: COH) could be a better option for investors.

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As of 2.11.2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Cochlear Ltd. 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.

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