Cochlear Shares on the Rise Amid US Reimbursement Proposals

Cochlear Ltd's shares soared to a 13-month closing high as brokers predict a potential boom in the company's earnings, driven by a US proposal to expand reimbursement for cochlear implants for the elderly. Analyst Jack Mordes of Goldman Sachs JBWere believes that if the Centres for Medicare and Medicaid Services in the US lifts subsidies for implants for people over 65 years old, Cochlear's market size could at least double, leading to an estimated 5% increase in full-year earnings per share for 2006.

Key Takeaways:

• Cochlear Ltd's shares rose 92 cents, or 3.54%, to a 13-month closing high of $26.94, after analysts predicted benefits from US reimbursement proposals.
• Analyst Jack Mordes of Goldman Sachs JBWere estimates that Cochlear's market size could at least double, driven by increased subsidies for cochlear implants for people over 65 years old.
• The company currently sells about 3,500 units annually in the United States, with approximately 300 units going to people over 65 years old.
• Mordes notes that the cochlear market could attract corporate interest, previously considered a niche market due to its small scale.
• If the reimbursement proposal is implemented, Cochlear's shares could trade in the $28-$30 range.
• The company's earnings forecast for 2006 is expected to increase by 5% with the implementation of the reimbursement proposal.

Statistics:

• Cochlear Ltd's shares rose by 3.54% to $26.94, the highest closing price in 13 months.
• The company sells approximately 3,500 units annually in the United States.
• About 300 of these units are sold to people over 65 years old.
• Analysts predict the company's market size could at least double with increased reimbursement for coblear implants.
• Full-year earnings per share for 2006 may increase by 5% if the reimbursement proposal is implemented.

Sources:

• Asia Pulse, Jan 11, 2006
• Goldman Sachs JBWere research note to clients, analyst Jack Mordes, 2006