S&P/ASX 200 Index (ASX: XJO) healthcare share Cochlear Ltd (ASX: COH) could be a leading performer over the coming years, if the broker UBS is correct.
The broker UBS describes Cochlear as an Australian company that manufactures implantable hearing solutions and other sound-enhancing products, accessories, and services. These include cochlear implant systems, bone conduction systems, and sound processor upgrades. Cochlear generates revenue worldwide, with a significant portion of that coming from the US.
Cochlear is one of the ASX's success stories, with the company claiming a significant market share globally. Despite its long-term success, the broker UBS still thinks Cochlear shares could deliver strong returns.
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Exciting price target for the ASX 200 healthcare share
UBS currently rates Cochlear as a buy, with a price target of $350. A price target is where analysts think the business will be trading in a year from the investment call.
The broker is therefore suggesting that the Cochlear share price could climb by 25% within the next year.
UBS is forecasting the company's net profit after tax (NPAT) could climb from $458 million in the 2026 financial year and continue rising each year to $657 million by the 2029 financial year. In other words, the broker is suggesting the net profit could rise by 43% over the next four financial years.
The broker noted that a number of the company's value drivers remain intact.
First, there's the forecast high single-digit Cochlear implant global market growth. Comments from Cochlear suggest global Cochlear implant growth of around 9% in FY26, according to UBS.
Second, the ASX 200 healthcare share's cochlear implant market share is expected from the new Nexa platform.
Third, there's a likely recovery in the sound processor replacement rate and services revenue, though that's more likely in FY27.
UBS also commented the following on the ASX 200 healthcare share:
In particular, early feedback on the Nexa platform has been positive with surgeons mostly focused on the future potential hearing benefits from multipolar stimulation and further reduction in sound processor size. COH's segmental comments on revenue growth, including developed market CI unit growth >10%, suggest its FY26 NPAT guidance ($435-460m) is conservative, especially at the bottom end.
…This looks to be based on revenue growth of +5-11% vs consensus +11%, and a flat NPAT margin. We believe the bottom end of this revenue growth growth rate is conservative. In particular, other revenue guidance comments, including developed market CI unit growth >10%, "solid" services growth, "double digit" acoustics growth, implies group revenue growth of ~9%. Plus, comments around Services revenues are likely to be conservative given the challenges in FY25.
Cochlear share price valuation
According to the forecast from UBS, the Cochlear share price is valued at 40x FY26's estimated earnings.
Time will tell if UBS is right about the size of the gains from Cochlear shares in the coming year. If the stock rises 25%, I'd expect that to significantly beat the ASX 200 share return.
