Cochlear share price takes off despite guidance miss

The Cochlear Limited (ASX: COH) share price is in the green on Friday following the release of the company’s financial year 2022 earnings.

The implantable hearing devices giant’s stock opened today’s session at $214.65, representing a 0.2% gain before slipping to its intraday low of $213 – a 0.5% dip. Fortunately, it pushed past early uncertainty to lift to a high of $223.48 – a 4.33% increase.

Since then, it’s settled slightly to trade at $222.85. That represents a 4.04% improvement.

Let’s take a closer look at how the company performed in financial year 2022.

Cochlear share price lifts as profit and dividends rise

The Cochlear share price is on a roll after the company revealed $277 million of underlying profit and even stronger guidance.

As The Motley Fool Australia reported this morning, it also announced a $1.45 final dividend, bringing its total financial year 2022 dividends to $3. That marks an 18% year-on-year improvement.

Finally, the company expects its profit to lift up to $305 million – the high-end of its guidance – this financial year. That would represent a 10% year-on-year increase.

But that hasn’t been enough to please brokers.

How have brokers responded?

Macquarie’s David Bailey said the company’s profit missed the consensus estimate by 3% while its outlook missed by 2%, The Australian reports. Bailey was quoted as saying:

Overall, a slight miss to consensus expectations and our forecasts for FY23 … However, we see the launch of the Nucleus 8 to be a key focus – we are looking for details in relation to differences relative to the N7 functionality and size.

Wilsons is also disappointed by the company’s guidance. It said the market expected a top line of $310 million, the Australian Financial Review (AFR) reports. The broker said, courtesy of the publication:

The guidance reflects higher expenses related to cloud computing upgrades and market preparation for a new sound processor launch. The long-awaited launch of Nucleus 8 Processor is an important leading indicator for Cochlear implant volumes.

The Cochlear Nucleus 8 Sound Processor (N8) achieved CE Mark approval this month. Commercial availability of the technology will kick off in Europe over the coming months. It’s expected to launch in other markets later this year, subject to regulatory approvals. Wilsons was quoted as saying:

We assess N8 cycle will commence … with [around] 30% larger recipient base than the N7 cycle and can support 13% to 15% Services revenue [compound annual growth rate (CAGR)] over the next four years.

On that note, the broker is said to remain positive on the stock. It previously had a $235 price target and an overweight rating on Cochlear shares.

The post Cochlear share price takes off despite guidance miss appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. and Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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