Cochlear Ltd (ASX: COH) shares are flying on Tuesday, jumping 7% to $140.90 in afternoon trade and extending their monthly gain to 17%.

Investors have welcomed the hearing-implant leader’s FY26 results, with underlying net profit landing at $322 million — right at the top end of the company’s revised guidance.

That’s a dramatic change in sentiment from April, when Cochlear shares were crushed by around 40% after management slashed its profit outlook. Despite Tuesday’s rebound, the shares remain down 46% year to date and 55% over the past 12 months.

So, what has changed?

Cochlear delivers on revised guidance

Cochlear’s FY26 numbers show a business still facing challenges, but one that’s generating strong cash and continuing to invest heavily in future growth.

Sales revenue increased 2% in constant-currency terms to $2.343 billion. Underlying net profit, however, fell 22% to $322.4 million.

The pressure on profitability was particularly visible in gross margins, which declined from 74% to 71%. Cochlear blamed the deterioration on a less favourable sales mix and production variances.

Still, there were some significant positives.

Operating cash flow surged $130 million to $368 million, while free cash flow also improved substantially. The company continued to invest aggressively in research and development, lifting R&D spending 15% as it accelerated work on its product pipeline.

That investment is already producing results.

Nexa gives investors something to cheer about

Cochlear has launched the Nucleus Nexa System, which it describes as the first smart cochlear implant with upgradeable firmware.

The product has made an impressive start. It quickly accounted for more than 95% of Cochlear’s implant sales across developed markets.

That kind of product momentum could be important as the company attempts to reignite growth in its developed markets.

However, Cochlear isn’t escaping all the pressures facing the business. Gross margins have been squeezed by a greater proportion of lower-priced products being sold in emerging markets. Softer demand in Western Europe and parts of Asia has also weighed on performance.

The company has responded by maintaining tight control over fixed costs and freeing capacity for an additional $25 million of investment in FY27.

What’s next for Cochlear shares?

Management isn’t promising a dramatic recovery overnight. Instead, it expects low single-digit revenue growth in constant-currency terms during FY27.

Underlying net profit is forecast to land between $330 million and $350 million.

Cochlear wants to accelerate adult growth in developed markets by increasing medical engagement and expanding referral pathways. At the same time, it plans to keep investing in R&D and product innovation.

The dividend remains an important part of the shareholder return story. Cochlear declared a final ordinary dividend of $1.30 per share, 85% franked, taking total FY26 dividends to $3.45 per share. That’s down 20% from the previous year.

The company will continue targeting a dividend payout ratio of 70% of underlying net profit.

Cochlear’s balance sheet also gives investors something to watch. Net cash declined, partly because of continued cloud investment and dividend payments. With net cash below management’s preferred level, the on-market share buyback remains inactive.

Gross margins are expected to remain around FY26 levels, while further restructuring costs will factor into the FY27 outlook.

The post Why are Cochlear shares flying 7% higher today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther 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. 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.

The Korea Composite Stock Price Index (KOSPI) experienced a devastating peak-to-trough crash of 44% last month.

The KOSPI skyrocketed more than 170% in FY26 due to multiple factors including the artificial intelligence (AI) tailwind.

South Korean chip makers Samsung Electronics and SK Hynix Inc surged a crazy 459% and 807%, respectively, in FY26.

They make up about half of the market’s total market cap, which means KOSPI is a concentrated bet despite being home to 800 stocks.

It’s no surprise that after stock price gains like that, some investors got a bit wary and chose to take their profits and run.

That’s one reason why the KOSPI crashed on 23 June, falling 10% in one day, and sparking a five-week sell-off.

SK Hynix shares lost just over half their value, and Samsung shares dropped 41% before the KOSPI bottomed out on 29 July.

Australian investors who own SK Hynix and Samsung shares directly felt the full force of that fall.

They also felt it via the iShares MSCI South Korea AUD ETF (ASX: IKO) — the Australian market’s top performing ETF of FY26.

IKO ETF delivered an amazing total return of 171% in FY26. The ASX IKO unit price fell 37% during the KOSPI crash.

What’s happened to KOSPI and IKO ETF since the crash?

For the record, IKO ETF doesn’t track the KOSPI.

Instead, the fund seeks to mimic the performance of the MSCI Korea 25/50 Index before fees.

The MSCI Korea 25/50 Index focuses on South Korean large-caps and mid-caps, but in practical terms, it captures 85% of the KOSPI.

SK Hynix and Samsung Electronics make up 46% of the MSCI Korea 25/50 Index market cap.

IKO ETF has been trading for a long time.

Its inception was in the US in May 2000. It was listed on the ASX in November 2017.

IKO was subsequently restructured into an Australian-domiciled ETF in October 2018.

As reflected in IKO ETF’s history in the chart above, the South Korean market has not been a strong performer over the long term.

There are many reasons for this, and it’s summed up by what the professional traders used to call the ‘Korea discount’.

We explain the Korea discount in an earlier story.

Despite its incredible 171% return in FY26, IKO remains a relatively small ASX ETF.

Aussie investors have put about $213 million into the ETF to date, according to ASX data.

That compares to $25.377 billion invested in the market’s largest ETF, Vanguard Australian Shares Index ETF (ASX: VAS).

While small in comparative scale, it’s worth noting the relatively rapid rise in investment in IKO ETF.

ASX investors piled in while watching the KOSPI’s stratospheric rise.

Between January and June 2026 inclusive, IKO’s funds under management rose 40%.

Australians are much more in-tune with overseas markets than they used to be.

Experts agree our home bias toward ASX 200 shares is shifting.

Since bottoming out on 29 July, the KOSPI has rebounded 23%, and IKO has recovered 25%.

SK Hynix shares have lifted 20% and Samsung Electronics stock is 30% higher.

The AI investment megatrend has a long way to go.

As RMIT University finance professor Angel Zhong points out, markets “often move through cycles of exuberance and reassessment”.

Zhong said AI would continue to transform industries:

The AI revolution is creating genuine economic opportunities, but markets often price in expectations long before those benefits are fully realised.

The post How the KOSPI crash impacted ASX investors appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX shares have rebounded over the past month as inflation and interest-rate concerns have eased.

At the time of writing, the All Ordinaries Index (ASX: XAO) is up around 0.5% for the day. The index is also 3% higher year to date.

The increase is great news for investors, but now many have their eye focused on which ASX shares could climb even higher over the next 12 months.

Here are three stocks which are tipped to outperform the index, and they’re all forecast to jump up to 66% higher.

Catalyst Metals Ltd (ASX: CYL)

Catalyst Metals shares are down around 1.5% and trading at $6.46 a piece, at the time of writing. For the year-to-date, the shares are down around 12%.

It’s been a rocky 12 months for the ASX gold producer’s shares.

The share price spiked to an all-time high in January when the company announced a significant new high-grade discovery at its Plutonic Gold Belt. 

But then the gold stock then shed around 52% of its value to an annual low in early-June. The crash followed headwinds from a weaker gold price, higher mining costs and an investor rotation away from gold shares.

But now it looks like a recovery is in sight and the previous headwinds are turning into tailwinds. Catalyst Metals shares have now rebounded around 37% from the June-low.

Catalyst Metals has a long period of operational consistency and organic growth and looking ahead, the miner expects production to increase towards the latter half of FY26 as well. 

Market Index data shows that brokers agree a strong buy rating on the rate the ASX shares. They tip an average target price of $10.75. That implies a potential 66% upside at the time of writing.

Predictive Discovery Ltd (ASX: PDI)

Predictive Discovery has suffered the same headwinds as Catalyst Metals this year. Higher mining costs, weaker gold prices, and an overall investor rotation away from ASX gold shares into larger, more stable assets, has seen a steep investor sell off. 

The shares fell to an eight-month low of 61 cents a piece in mid-July but have now rebounded around 41%. At the time of writing, the shares are up around 1% for the day and changing hands at 86 cents each.

They’re now 17% higher for the year-to-date and a huge 95% higher than 12 months ago.

And the experts think the gold miner’s shares can keep climbing higher too.

Predictive Discovery’s production numbers are expected to increase in the latter half of the year, with the miner actively developing gold deposits in Guinea’s Siguiri Basin. 

Market Index data shows brokers agree to a strong buy rating on the ASX shares. The maximum target price is $1.35 per share, which implies a potential 57% upside at the time of writing.

Judo Capital Holdings Ltd (ASX: JDO)

Judo was one of the strongest-performing bank shares on the ASX earlier this year. But the stock crashed 46 in late-June after it downgraded its profit guidance for FY26. 

The ASX 200 bank stock revealed that its profit before tax in FY26 is now expected to be between $163 million and $169 million (approximately 30% growth on FY25). This is down from the previous guidance of $180 million to $190 million.

But the bank posted its FY26 results ahead of the market open this morning and it seemed to be much better than the market expected. Judo announced strong gains across the board. NPAT increased 29% to $111.1 million and profit before tax increased 34% to $168.1 million, the top end of Judo’s revised guidance range.

Investors are now rushing back into the stock. At the time of writing, the shares are up an impressive 12% for the day so far, and changing hands at $1.02. It means Judo shares have now recovered around 16% of the losses shed in June, but they’re still 43% lower for the year-to-date and 42% lower than this time last year.

It’s clear that the selloff was way overdone and that the bank is growing stronger than many anticipated. Analysts are very bullish that the stock can keep rebounding higher in coming months.

Market Index data shows the majority of brokers have a strong buy rating on the shares. The $1.49 average target price implies a potential upside of around 51%, at the time of writing. 

The post Brokers tip these 3 ASX shares to climb another 50% to 66% appeared first on The Motley Fool Australia.

More reading

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• Judo Capital reports FY26 earnings and upbeat outlook
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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.