How did the Cochlear (ASX:COH) share price respond last earnings season?

Shares in the hearing aid manufacturer are on the move in anticipation of its FY21 earnings tomorrow

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The Cochlear Ltd (ASX: COH) share price has stepped into the green in afternoon trade on Thursday.

Shares in the hearing aid manufacturer are exchanging hands at $257.12 apiece, a 1.23% jump from yesterday’s close of $253.

The Cochlear share price is on the move as the company is due to report its FY21 earnings on Friday.

In addition, given its strength on the charts this year to date, it’s worthwhile investigating what happened to the Cochlear share price after the company’s last earnings report. Let’s do just that.

What did Cochlear deliver back in February?

The company recognised a 4% decline in first-half sales to $742 million. This carried through to a 6% decline in underlying net profit, to $125 million.

Moreover, the company saw a recovery in its key markets, including the US, Japan, Korea, and China. Furthermore, Cochlear sales were strong in Europe in the first half.

In addition, Cochlear declared a $1.15 per share dividend, which was a 28% down-step from the year prior.

Given this momentum, Cochlear provided full-year net profit guidance of $225 million to $245 million, calling for a 46% to 59% year-on-year increase, respectively.

What happened to the Cochlear share price?

In a negative for the Cochlear share price, investors punished the company on the charts in the two weeks following the release. It was trading at $221 per share at the close on 19 February.

It appeared the market received a decline in sales and net profit with closed arms. What’s more, the dividend haircut didn’t go down too well, either.

As a result, the Cochlear share price immediately took a hit, wiping $21 per share or 9.5% off the charts.

However, in a demonstration of resiliency, Cochlear shares have since climbed back north at a tremendous pace.

To illustrate, since the low quoted above of $200 on 5 May, Cochlear has gained $57 per share, or a further 28.5%.

Given there’s been no market-sensitive information for the company since that time, it may be that investors are baking in the 46% – 59% in growth profit guidance for FY22 that management alluded to back in February.

Nonetheless, Cochlear shareholders will be hoping the company delivers on its guidance targets. Especially considering how the market reacted to its previous earnings report.

At the current price, Cochlear has a market capitalisation of $16.7 billion, and has climbed 35% since January 1.

For context, the S&P/ASX 200 index (ASX: XJO) has posted a return of around 14% this year to date.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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