charts of interest, page-6

This would explain why the stock is falling in the last few days

Cochlear (COH) is being trounced by competitor Sonova, in the view of some brokers. Market share concerns prevail for both Citi and Morgan Stanley as Sonova reported cochlear implant sales grew 23.0% in US dollar terms terms in its first half. This growth occurred despite an interruption from a hardware launch and the absence of Chinese tender sales. Morgan Stanley estimates implant unit growth for Cochlear in the second half of FY14 was a disappointing 3.2%, ex tenders. The broker suspects the company is losing market share, as Sonova reported 50.2% revenue growth for its cochlear implant division, Advanced Bionics, in its first half. The broker does not believe the premium at which Cochlear is trading against FY15 estimates is justified. Morgan Stanley estimates the earnings per share compound growth rate since the company's pre-N5 recall in 2010 is just 2.0%, while the rate for units over the same period is 5.0%. Citi concludes that AB is gaining market share at the expensive of Cochlear, the industry's largest player. The broker assumes a significant speech processor upgrade cycle through FY15 and implant unit sales growth of 7% in the US in 2015, but this requires a slight reversal of recent market share losses upon the release of the Nuclear Profile implant, supported by the full features of the N6 speech processor. Given Sonova's results, Citi suspects there is increased downside risk to this scenario. The broker also considers Cochlear expensive in both absolute and relative terms. If market share losses continue and/or market growth remains modest, downside risks are heightened. Regulatory intervention and reimbursement changes in the US add a further uncertainty to the mix.

Just Saying Sam2k