Cochlear Ltd (ASX: COH) shares have underwhelmed over the past 12 months.
During this time, the hearing solutions company's shares are down approximately 10%.
This compares unfavourably to a 7% gain by the ASX 200 index over the same period.
Let's see if the team at Macquarie Group Ltd (ASX: MQG) thinks this is a buying opportunity for Aussie investors wanting exposure to the healthcare sector.
What is Macquarie saying about Cochlear and its shares?
Macquarie has been surveying US-based audiologists and looking at new patient trends. It sees the survey results as somewhat mixed for Cochlear. It said:
Over the past 12M, 60% of participants experienced a modest-to-substantial increase in new CI patients, with the vast majority being adult referrals. Average new CI patient growth was ~4%. COH have previously noted strong lead generation from DTC marketing. However, lack of awareness and loss of hearing aid patients/ revenue remain barriers to increased adult referrals by audiologists.
Unfortunately, despite the release of new products, the audiologists surveyed believe that rival Med-El is better positioned to grow its market share over the next 12 months. It adds:
Despite the approval of COH's Nucleus Nexa (NN), ~44% of respondents see Med-El as best placed to gain share over the next 6-12M. This may reflect FDA approval of Med-El's Sonnet 3 processor in Feb-25.
Though, there is excitement growing for Nucleus Nexa, which may bode well for the future. Macquarie explains:
Key comments reflect excitement for the upgradable firmware in relation to more robust adjustments and future processor implications, albeit met with concern over reliability of internally stored data. However, the majority of participants are yet to form a view.
Fairly priced
Macquarie hasn't seen anything from the survey to change its view of the stock.
According to the note, this morning the broker has retained its neutral rating on Cochlear's shares with a price target of $270.50.
Based on its current share price of $297.52, this implies potential downside of 9% for investors over the next 12 months.
Commenting on its neutral rating, Macquarie said:
Neutral. We see COH's current share price as fair, with downside risk from services revenue in the near term. Success of the NN sytem presents upside risk to our earnings.
Catalysts: Activity/CI unit trends; competitor CI developments (e.g. Med-El TICI pivotal trial outcomes; incorporation of new Sonova technology into CI).
