Cochlear Limited Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year

Cochlear Limited (ASX:COH) defied analyst predictions to release its interim results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 6.8% to hit AU$743m. Cochlear also reported a statutory profit of AU$3.59, which was an impressive 142% above what the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Cochlear

Following the latest results, Cochlear's 14 analysts are now forecasting revenues of AU$1.51b in 2021. This would be a meaningful 15% improvement in sales compared to the last 12 months. Cochlear is also expected to turn profitable, with statutory earnings of AU$4.61 per share. Before this earnings report, the analysts had been forecasting revenues of AU$1.42b and earnings per share (EPS) of AU$3.08 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a massive increase in earnings per share in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of AU$203, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Cochlear, with the most bullish analyst valuing it at AU$241 and the most bearish at AU$138 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Cochlear's rate of growth is expected to accelerate meaningfully, with the forecast 15% revenue growth noticeably faster than its historical growth of 4.9%p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 14% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Cochlear is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Cochlear following these results. They also upgraded their revenue forecasts, although the latest estimates suggest that Cochlear will grow in line with the overall industry. The consensus price target held steady at AU$203, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Cochlear going out to 2025, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 1 warning sign for Cochlear you should be aware of.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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