Is the Cochlear (ASX:COH) share price in the buy zone?

The Cochlear Limited (ASX:COH) share price is up 16% since the start of the year. Is it too late to invest? Here’s what you need to know…
The post Is the Cochlear (ASX:COH) share price in the buy zone? appeared first on The Motley Fool Australia. –

cochlear share price

The Cochlear Limited (ASX: COH) share price has been a strong performer so far in 2021.

Since the start of the year, the hearing solutions company’s shares are up a sizeable 16%.

Why is the Cochlear share price charging higher?

The Cochlear share price was given a major boost earlier this month from the release of a better than expected half year result.

For the six months ended 31 December, the company reported a 4% decline in sales to $742.8 million. This followed a big improvement in the second quarter which saw constant currency sales increase 7% over the prior corresponding period.

On the bottom line, the company posted a 6% decline in underlying net profit to $125.3 million. Management advised that this reflected a recovery in its sales and lower operating expenses due to material COVID-19 related savings.

Impressively, in constant currency, this was just a 4% decline from last year’s record half year profit. That period was of course prior to COVID-19 emerging and disrupting the global economy.

Is it too late to buy shares?

One broker than believes the Cochlear share price is overvalued now is Goldman Sachs.

This week the broker reiterated its sell rating but lifted its price target on the company’s shares to $189.00.

Based on the latest Cochlear share price of $220.38, this price target implies potential downside of over 14%.

Why is Goldman Sachs tipping the Cochlear share price to decline?

Goldman explained why it is bearish on Cochlear.

It said: “Whilst near-term growth rates are strong off a depressed FY20 base, we struggle to see COH retracing pre-Covid expectations for many years. We currently model an installed base in FY23 that is -3% below our pre-Covid forecast, and yet, adjusting for the 15% equity dilution in Mar-20, COH is now trading +5% above its pre-Covid peak.”

“There are still many reasons to like this stock, but we expect the majority of ‘recovery’ upgrades will be posted after Friday’s 1H21 results update and, looking slightly further ahead, we believe COH’s normalised EBITDA CAGR of 8% (FY22-25E) does not support its peak multiple (31.0x NTM EBITDA, +1 SD above 5yr avg.; +46% vs. sector),” it concluded.

However, one broker that doesn’t agree with this view is Macquarie. Last week the broker reaffirmed its outperform rating and lifted its price target to $245.00.

Time will tell which broker is right.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Is the Cochlear (ASX:COH) share price in the buy zone? appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!