"Shares in market-leading hearing implant manufacturer Cochlear Limited(ASX: COH) are up 33% over the course of 2017 and nearly 7% since June 13 2017 when the company gained U.S. FDA regulatory approval for its new Nucleus 7 Sound Processor.
FDA approval for any significant new product is always a welcome moment for medical device businesses and Cochlear is no different in this sense.
The N7 processor is said to be superior to the N6 as, inter alia, it is iPhone and iOS app compatible and its telecoil is optimised for loops. Notably, it is the competitive advantage derived from Cochlear’s new technologies that has allowed it to grow profits at consistent double-digit rates over a long period of time.
As such the stock trades on around 40x analysts’ estimates for earnings per share of $3.86 in FY 2017, which may sound expensive until you consider that FY 2018 is only days away.
For the next financial year analysts’ expect another year of double-digit growth as the company’s (recurring revenue) services businesses continues to grow, alongside its core business of selling hearing implants to new patients."
COH Price at posting:
$158.28 Sentiment: Buy Disclosure: Held
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