Cochlear Ltd Shares Surge as Analysts Upgrade Following Bionic Ear Rival's Takeover

Strategic Insights -

Cochlear Ltd, the Australian manufacturer of bionic ears, saw its shares jump by as much as four percent on Friday, closing at A$21.50, their highest level since March 10. The surge followed the takeover of Advanced Bionics Corp, a US-based medical device maker, by Boston Scientific Corp for US$740 million. This acquisition has sparked analyst upgrades for Cochlear, with Goldman Sachs JBWere and Citigroup predicting positive outcomes for the company. However, not all analysts share the same optimism, with Credit Suisse First Boston viewing the development as negative for Cochlear.

Key Takeaways:

  • Cochlear Ltd's shares increased by as much as four percent after Advanced Bionics Corp's takeover by Boston Scientific Corp.
  • The acquisition of Advanced Bionics Corp by Boston Scientific Corp was valued at US$740 million (A$1.05 billion), roughly the same as Cochlear's market capitalisation.
  • Cochlear holds about two-thirds of the hearing implant market, while Advanced Bionics holds significantly less.
  • Analysts from Goldman Sachs JBWere and Citigroup expect competition to intensify after the deal, but believe it will promote the growth and penetration of the cochlear implant market.
  • Citigroup analysts stated that the takeover event supported expectations of a shift in sentiment toward the longer-term market potential.
  • UBS analysts stated that Advanced Bionics's forecasts of growth in the cochlear implant industry suggested current estimates had been conservative.

Statistics:

  • Cochlear Ltd's shares closed at A$21.50, their highest level since March 10.
  • The shares increased by 1.3 percent on the day, with a total increase of eight percent in two days.
  • Advanced Bionics Corp's takeover by Boston Scientific Corp was valued at US$740 million.

Sources:

  • Asia Pulse, June 3
  • Thomson Financial News, June 3
  • Sydney Morning Herald, June 4