Cochlear share price takes off despite guidance miss

The healthcare giant's stock is surging despite its apparent guidance miss.

Key points
  • The Cochlear share price is lifting on Friday, rising 4% to trade at $222.85 
  • It comes after the company posted $3 of total dividend for financial year 2022, alongside $277 million of underlying profit 
  • However, brokers are seemingly disappointed with the company's financial year 2023 guidance 

The Cochlear Limited (ASX: COH) share price is in the green on Friday following the release of the company's financial year 2022 earnings.

The implantable hearing devices giant's stock opened today's session at $214.65, representing a 0.2% gain before slipping to its intraday low of $213 – a 0.5% dip. Fortunately, it pushed past early uncertainty to lift to a high of $223.48 – a 4.33% increase.

Since then, it's settled slightly to trade at $222.85. That represents a 4.04% improvement.

Let's take a closer look at how the company performed in financial year 2022.

cochlear happy, share price rise, up, increase

Image source: Getty Images

Cochlear share price lifts as profit and dividends rise

The Cochlear share price is on a roll after the company revealed $277 million of underlying profit and even stronger guidance.

As The Motley Fool Australia reported this morning, it also announced a $1.45 final dividend, bringing its total financial year 2022 dividends to $3. That marks an 18% year-on-year improvement.

Finally, the company expects its profit to lift up to $305 million – the high-end of its guidance – this financial year. That would represent a 10% year-on-year increase.

But that hasn't been enough to please brokers.

How have brokers responded?

Macquarie's David Bailey said the company's profit missed the consensus estimate by 3% while its outlook missed by 2%, The Australian reports. Bailey was quoted as saying:

Overall, a slight miss to consensus expectations and our forecasts for FY23 … However, we see the launch of the Nucleus 8 to be a key focus – we are looking for details in relation to differences relative to the N7 functionality and size.

Wilsons is also disappointed by the company's guidance. It said the market expected a top line of $310 million, the Australian Financial Review (AFR) reports. The broker said, courtesy of the publication:

The guidance reflects higher expenses related to cloud computing upgrades and market preparation for a new sound processor launch. The long-awaited launch of Nucleus 8 Processor is an important leading indicator for Cochlear implant volumes.

The Cochlear Nucleus 8 Sound Processor (N8) achieved CE Mark approval this month. Commercial availability of the technology will kick off in Europe over the coming months. It's expected to launch in other markets later this year, subject to regulatory approvals. Wilsons was quoted as saying:

We assess N8 cycle will commence … with [around] 30% larger recipient base than the N7 cycle and can support 13% to 15% Services revenue [compound annual growth rate (CAGR)] over the next four years.

On that note, the broker is said to remain positive on the stock. It previously had a $235 price target and an overweight rating on Cochlear shares.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. and Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Healthcare Shares

A female scientist in a laboratory setting using a tablet to review data, with a male scientist working in the background.
Healthcare Shares

ResMed vs Fisher & Paykel Healthcare: Which is better value?

How do ResMed and Fisher & Paykel compare on value, income, and share price momentum? Here’s my verdict on which…

Read more »

Happy doctor using her laptop.
Healthcare Shares

CSL unveils exclusive Alentis deal to advance rare disease treatments

CSL unveils a major partnership for rare disease drug development, enhancing its global nephrology strategy.

Read more »

Doctor sees virtual images of the patient's x-rays on a blue background.
Healthcare Shares

Could this ASX biotech really jump more than 80% in value?

This company's new technology has one broker impressed.

Read more »

Teamwork, planning and meeting with doctors and laptop for medical, review and healthcare. Medicine, technology and internet with group of people for collaboration, diversity and support in hospital
Healthcare Shares

CSL vs Pro Medicus: Which ASX healthcare share is better?

Both CSL and Pro Medicus have faced recent challenges but have enviable long-term track records. Here's which one I'd buy…

Read more »

Scientists working in the laboratory and examining results.
Healthcare Shares

This ASX biotech could rise almost 50%, Morgans says

Turning science into contracts could unlock value for this company.

Read more »

Doctor with stethoscope using a tablet in a hospital.
Healthcare Shares

Telix Pharmaceuticals wins FDA Fast Track for BiPASS prostate cancer imaging

Telix Pharmaceuticals shares are in the spotlight after the FDA granted Fast Track for its BiPASS pre-biopsy prostate cancer imaging…

Read more »

Three scientists looking at a laptop in a lab.
Healthcare Shares

What would it take for CSL shares to return to $250?

The shares have already recovered strongly, so I wanted to see whether $250 is realistic.

Read more »

Doctor with stethoscope typing on her computer.
Healthcare Shares

Is the ResMed share price a cheap buy?

I look at what the next few years of earnings growth could mean for today’s valuation.

Read more »