Australia's Cochlear faces worst day in 5 years on weak earnings, forecast

Cochlear

14/02/2025 01:24

By Aaditya GovindRao
       Feb 14 (Reuters) - Cochlear  COH.AX  shares were on
track for their worst session in five years on Friday, after the
Australian hearing implants maker reported first-half profit
below estimates and forecast annual earnings at the lower end of
its previous range.
    The stock, one of the priciest on the benchmark index until
Thursday's close, sank as much as 13.5% and looked set to post
its biggest single-day drop since March 16, 2020. It was among
the top losers on the S&P/ASX 200 index  .AXJO , which was up
0.4%, as of 0051 GMT.
    Sydney-based Cochlear said it now expects its fiscal 2025
underlying profit to be at the lower end of the $410 million to
$430 million range forecast in August, citing lower contribution
from its services segment.
    The company also predicts a single-digit decline in
full-year services revenue, compared with its previous
expectation of a modest growth. The services segment accounts
for about 26% of the company's total revenue.    
    "In the U.S., cost of living pressures have been a factor
delaying the replacement of ageing sound processing technology,
as many recipients incur out-of-pocket expenses to fund their
new sound processors," the company said in a statement.
    Cochlear's underlying net profit came in at $205.5 million
for the first half of the year, missing a Visible Alpha
consensus estimate of $209.3 million, according to investment
adviser Jarden.
    Revenue from the services segment, which offers sound
processor upgrades for hearing implants, declined 13%, hurt by a
slow uptake of Cochlear's latest "Nucleus 8" sound processor.
    "New expectations for being at the lower end of profit
guidance could be cause for concern or it could just be a blip
if services revenue in fiscal 2026 can pick up again with new
product launches," analysts at UBS said in a note.
    

 (Reporting by Aaditya Govind Rao in Bengaluru; Editing by
Subhranshu Sahu)
 ((Aaditya.GovindRao@thomsonreuters.com;))