Cochlear Ltd (ASX: COH) shares closed 1.6% lower at $281.66 apiece on Tuesday.
The ASX 200 healthcare share underperformed the broader market, with the S&P/ASX 200 Index (ASX: XJO) closing 0.08% lower.
Cochlear is the sixth largest ASX 200 healthcare company by market capitalisation.
The Cochlear share price has fallen 3.7% in the year to date and is down 14% over the past 12 months.
Let's find out whether top broker Macquarie rates Cochlear shares a buy, hold, or sell.
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Macquarie's latest verdict on Cochlear shares
Macquarie has released a note on the cochlear implant manufacturer.
Macquarie maintained a neutral rating on Cochlear shares in response to the company's downgraded FY25 profit guidance.
Last week, Cochlear announced that it expects underlying FY25 net profit after tax (NPAT) to be in the range of $390 million to $400 million.
The previous guidance was the low end of between $410 million to $430 million.
The main drag on the profit outlook is an expected double-digit fall in revenue for its services division.
Previously, Cochlear had forecast a single-digit fall after two years of strong growth following the Nucleus 8 Sound Processor launch.
Cochlear said there would be a larger fall due to sales growth in developed markets tracking lower than expected this year.
While cochlear implant unit sales are still expected to rise by about 10%, that growth is skewed towards emerging markets.
Cochlear expects the launch of its off-the-ear Kanso 3 Sound Processor to support a revenue recovery in FY26, but Macquarie is wary.
Macquarie said a new Nucleus processor isn't expected until about FY28, creating further downside risk in the medium term.
Macquarie said:
Despite the launch of Kanso 3 contributing to services revenue in FY26, we note the Nucleus processor line remains the primary driver.
With a new Nucleus processor not due until ~FY28, we see further downside risk to services revenue in the near term which has been captured in our updated forecasts.
The broker downgraded its earnings per share (EPS) forecasts by 5% to 7% for FY25 to FY27.
Macquarie still considers Cochlear a high-quality company that delivers superior and stable underlying earnings.
However, the broker said Cochlear shares have weak price momentum right now.
What's next for the share price?
Macquarie thinks Cochlear shares are overpriced at the moment.
The broker trimmed its 12-month share price target for Cochlear from $282.15 to $271.60.
This implies a potential 3.6% softening in the share price from here.
