Why Cochlear and ResMed shares could be strong buys

If you want exposure to the healthcare sector, then it could be worth hearing what Wilsons is saying.

That’s because the broker recently named the two popular ASX healthcare shares in this article as buys. Here’s what it is recommending to clients:

Cochlear Ltd (ASX: COH)

Wilsons is feeling positive about this hearing solutions company’s outlook thanks to a key new product launch. The broker feels that the launch of Nucleus Nexa could be supportive of double-digit implant growth over the medium term. It explains:

Cochlear is approaching an inflection point in its earnings growth trajectory, supported by the ongoing global rollout of Nucleus Nexa (approved in mid-2025), which is its most significant product launch in over two decades. Nexa’s upgradeable firmware architecture represents a step-change in implant technology, enabling ongoing improvements in sound processing, connectivity and battery life via its Smart Sync app.

The rollout over the next few years should support ~10% CI unit growth over the medium term, with potential upside toward the mid-teens, while recurring implant upgrades will extend the Nexa’s product cycle, supporting a longer duration of growth.

In light of this, the broker believes now could be the time to buy Cochlear shares. It adds:

Cochlear trades on a forward P/E multiple of ~26x, representing a >10 year low and a material discount to its 10-year average of ~42x. We view this as a compelling entry point for a high-quality business ahead of accelerating earnings growth.

ResMed Inc. (ASX: RMD)

The team at Wilsons is also very positive on ResMed shares. It highlights its strong operational performance and attractive valuation. It said:

Following another solid result in February, the company’s earnings upgrade cycle remains intact. As a result, ResMed continues to screen attractively across our earnings momentum, quality and valuation lenses.

The broker also notes that while its shares have recovered strongly from a selloff related to concerns over weight-loss wonder drugs in 2024, they are still trading on an undemanding valuation. It said:

Despite ResMed’s share price trading over 60% above its GLP-1 sell-off low, the valuation remains undemanding, as the rally has been driven predominantly by EPS growth rather than multiple expansion and is currently priced at a forward P/E of 21x, well below its 10-year average of 29x and its pre-GLP-1 level of 37x.

Combined with double-digit EPS growth expectations over the medium term, and further scope for upgrades given the ongoing earnings upgrade cycle, ResMed continues to offer compelling growth at a reasonable price.

The post Why Cochlear and ResMed shares could be strong buys appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Cochlear and ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Cochlear and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended Cochlear. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.