The Cochlear Limited (ASX: COH) share price continued its positive form on Tuesday and climbed to a new all-time high of $226.71.
When the hearing solutions company's shares hit this level it meant they had gained an impressive 30% since the start of the year.
Why is the Cochlear share price at an all-time high?
As well as benefiting from positive market sentiment, investors have been bidding up Cochlear's shares due to its strong performance during the first half of FY 2019 and its positive long term outlook.
In respect to the former, in the first half of FY 2019 Cochlear delivered an increase in sales revenue of 11% and net profit of 16% compared to the prior corresponding period.
A key driver of this strong first half performance was the company's Services business which grew revenue by 28%.
At the time, Cochlear's CEO, Dig Howitt, explained: "The Services business continues to grow in importance as our recipient base grows, now representing almost 30% of sales revenue. Cochlear's recipients have enthusiastically embraced the Nucleus 7 Sound Processor, the world's first Made for iPhone cochlear implant sound processor, launched in October 2017, with the addition of the Nucleus Smart App for Android, released in June 2018."
This strong half led to management maintaining its FY 2019 net profit guidance of $265 million to $275 million, which will be an increase of 8% to 12% on FY 2018's result. And judging by its strong share price rally this year, investors appear confident that the company will be hitting the high end of its guidance range.
In addition to this strong performance, the company's shares were given a boost from news that it has received U.S. Food and Drug Administration (FDA) approval for the Nucleus Profile Plus Series cochlear implant.
Cochlear's Nucleus Profile Plus Series is the latest range of Nucleus implants that three decades worth of collaborative clinical and technical research work has created.
This latest implant has been designed for routine 1.5 and 3 Tesla magnetic resonance imaging scans without the need to remove the internal magnet. This means that users of the implant can undergo a scan such as an MRI without needing to remove the internal magnet or to apply a bandage and splint. This wasn't possible with previous implants, making the new implant much more manageable and convenient for its users.
Given this development and management's plan to develop a totally implantable cochlear implant in the future, Cochlear looks well-placed to take advantage of the expected increase in demand for hearing assistance over the next few decades as ageing populations expand across the globe.
Should you invest?
Whilst Cochlear's shares look fully valued at the current level and better entry points may emerge in the coming months, I would still be a buyer of its shares if you were planning to hold them for the next decade.
The same applies for fellow healthcare sector stars CSL Limited (ASX: CSL) and ResMed Inc. (ASX: RMD), which I think would also be great buy and hold options.
