Why Cochlear Limited’s Share Price Bounced Back 3.29% Today

Cochlear Limited [ASX:COH] shares bounced back 3.29% this morning after a poor performance to start the week.

Cochlear, a leading hearing implant manufacturer, has seen its share price succumb to pressure from Bose’s entrance into the US market. The newcomer has released a new hearing aid which can be fitted without the need for a doctor.

COH’s share price dropped 5% yesterday, shedding about $11.34 per share. This wiped more than $600 million off its market cap. The drop marks Cochlear’s lowest point since mid-August.

Cochlear’s share price is currently trading at $198.20 at time of writing and has a market cap of $11.07 billion.

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What caused the bounce back?

This morning Cochlear announced the next phase of its long-term R&D project for a totally implantable cochlear implant.

According to the media release, this next phase involves a clinical feasibility study to evaluate the new implantable technology.

The 11-patient study will collect data associated with the performance and safety of the new product. Leading the study is Principle Investigators Associate Professor Robert Briggs, who says the product will allow people to hear without any externally worn components.

The news of Cochlear’s new implant has obviously instilled investors with new enthusiasm in the company after loudspeaker manufacturer Bose received FDA approval to market its hearing aid.

Cochlear’s share price yesterday was also affected by a general sell-off of Australian health stocks. We have seen a turn around in this today as investors likely realise healthcare stocks have carried the Australian market this year. CSL Limited [ASX:CSL] and Cochlear have collectively generated a YTD return of over 21%.

What’s next for Cochlear?

With a new competitor on the block you can be sure to see an uptick in investment for this kind of technology. Although Cochlear’s new product may be years away from launch, it’s a good sign to see the company isn’t sitting idly by.

Currently, COH is the only company that has reported studies of totally implantable cochlear implant technology. The company is striving towards a product that can provide people with hearing 24 hours a day.

In the meanwhile, Bose is backing a direct-to-consumer hearing aid, potentially opening the door for other consumer electronics companies. Its strategy focuses on the convince of self-installation and self-control using a smartphone app.

According to the FSD, more than 35 million adults and children in the US alone suffer from some degree of hearing loss. With the entrance of Bose into the market we can expect to see more competition surround hearing aid products.


Ryan Clarkson-Ledward,
For Money Morning

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Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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