ASX-listed medical device maker Cochlear Limited (AU:COH) delivered robust first-half sales and profits and rewarded its shareholders with generous dividends. Nonetheless, Cochlear shares fell 2.01% today as the company paused share buybacks due to higher interest rates.
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Based in Australia, Cochlear is a leading provider of hearing implant solutions, with operations across the U.S., Europe, and the Asia Pacific region.
Strong First-Half Results
The high demand for Cochlear’s upgraded Nucleus 8 Sound Processor boosted sales in the first half, with total revenue surging 25% year-on-year to AU$1.11 billion. The company saw a 14% rise in the unit sales of its hearing implants and a 26% increase in sales, reaching $648 million in H1 FY24 compared to a year ago. The net underlying profit surged by 35% to AU$191.8 million as of December 31, 2023.
Earlier this month, Cochlear raised its guidance for full-year 2024 implant unit sales growth to 10% to 15% from the previously anticipated high-single-digit growth. This growth is expected to be driven by strong demand across most markets and increasing adult referrals in developed countries.
The company declared a dividend of AU$2.0 per share for the first half of FY24, registering an increase of 29% from the first half ended on December 31, 2022.
Cochlear suspended share buybacks due to the opportunity to earn higher interest on its bank deposits, given the elevated interest rate backdrop. However, the company would resume buybacks once rates decrease enough to justify it.
Is Cochlear a Good Buy?
Speaking of the share price growth, analysts are not optimistic about the prospects due to the substantial rally in the stock. Over the last 12 months, COH shares have surged by 46%.
Post-results, analyst Mathieu Chevrier from Citi confirmed his Sell rating on the stock, predicting a decline of 22%.
According to TipRanks’ rating consensus, COH stock has received a Moderate Sell rating, backed by recommendations from 11 analysts. The Cochlear share price forecast is AU$277.39, indicating a downside of 15.4% from the current levels.
