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Top broker slaps buy rating on Cochlear shares

The Cochlear Limited (ASX: COH) share price has managed to push higher in morning trade despite the market sinking lower.

At the time of writing the hearing solutions company’s shares are up 1.5% to $176.70.

Why is the Cochlear share price pushing higher today?

With no news out of Cochlear this morning, today’s gain is likely to be attributable to a broker note out of Citi.

According to the note, the broker has upgraded Cochlear’s shares to a buy rating from neutral and lifted the price target on them to $198.00.

This price target implies potential upside of approximately 12% for its shares over the next 12 months.

Why is Citi bullish on Cochlear?

The broker has made the move after Cochlear’s share price tumbled lower over the last couple of weeks.

Prior to today, Cochlear’s shares had lost around 12% of their value since February 15. Citi felt that the selling had been overdone, prompting the upgrade.

In addition to this, its analysts now believe that Cochlear will overcome the impact of increased competition in the U.S. from competitors such as Sonova. It expects Cochlear’s implant growth in that market to resume in the second half of FY 2020.

Should you buy Cochlear’s shares?

I agree with Citi and think that Cochlear would be a great investment after its recent share price weakness. Although its first half results were a touch softer than expected, I feel investors ought to focus more on the next decade.

I believe that Cochlear’s long-term outlook is very positive due to the ageing populations tailwind, its high quality existing products, pipeline of exciting products under development, and its global distribution network.

Overall, I believe it would be a great buy and hold option along with fellow healthcare stars CSL Limited (ASX: CSL) and ResMed Inc. (ASX: RMD).

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