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Cochlear shares tumble and Goldman Sachs’s gun analysts are sitting on the fence

Tom Richardson

Cochlear Ltd (ASX: COH) shares tumbled 4% to $202.02 today despite the hearing aid manufacturer releasing no specific news to the market.

The audiology researcher is due to hand in its financial results for the year ending June 30 2019 on August 16, with analysts expecting a net profit close to $269 million.

The company itself is guiding for a net profit between $265 million to $275 million which would represent growth between 8% to 12% on the prior year. 

The stock could be sinking today after the powerful analysts at Goldman Sachs downgraded their rating to a fence sitting “neutral” from “buy” on valuation grounds. The analysts have a $212 12-month share price target on the business, which suggests it has some 5% upside if Goldman’s analysis is on the money.

The analysts are valuing it using a 25.8x forward EV/EBITDA multiple. 

Other market-leading healthcare shares on the ASX on expensive valuations to consider include CSL Limited (ASX: CSL) and ResMed Inc. (ASX: RMD). 

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Tom Richardson owns shares of Cochlear Ltd., CSL Ltd., and ResMed Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. and CSL Ltd. The Motley Fool Australia has recommended Cochlear Ltd. and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019