Cochlear Limited (ASX: COH) shares have just closed the day with a small decline.
The ASX 200 hearing solutions company's shares dropped 0.5% to $240.84.
This means that Cochlear's shares are now down approximately 12% over the last two months.
While this is disappointing, the team at Goldman Sachs appear to believe that this could be a buying opportunity for investors.
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Why Cochlear is an ASX 200 share to buy and hold
Goldman Sachs is bullish on Cochlear due to its belief that the company is well-positioned for long-term growth thanks to its market leadership position. It commented:
The scale of the volume opportunity (20% of the global population suffers from hearing loss and cochlear implants are the well-established standard of care for the severe/profound cohorts, with limited prospect of any material change in market structure through the medium term at least).
COH looks set to remain the comprehensive CI market leader through the long term (we believe COH's current product portfolio is the strongest in many years, and this advantage should be maintained/extended through an annual R&D expenditure that exceeds the rest of the industry combined).
In light of the above, the broker believes Cochlear can grow its earnings at a compound annual growth rate of 15% through to FY 2026. It adds:
Overall, we make no changes to forecasts today but continue to highlight asymmetric upside risks to our FY24E NPAT forecast of $368m (currently in the middle of the guided range), on the back of strengthening industry fundamentals and a likely continuation of market share gains (across all major segments: CI, Services and Acoustics). From FY23-26E we forecast an NPAT CAGR of +15%.
Good upside potential
Goldman has a buy rating and a $280 price target on the ASX 200 share. This implies a potential upside of over 16% for investors over the next 12 months.
