Cochlear's (ASX:COH) cut to fiscal 2026 profit guidance "is far worse than anticipated," and the company's multiple is also at risk given its recent inability to provide reliable forecasts, Jarden said in a Wednesday note.
The company downgraded its fiscal year 2026 underlying net profit outlook to between AU$290 million and AU$330 million, saying that trading conditions for its hearing implants in developed markets have been weaker than expected since January.
"The issue seems to be largely in the Cochlear implant segment with developed markets softening, Middle East disruption, industrial action in Spain and Italy impacting surgical capacity, and a Chinese reimbursement reduction," Jarden said.
The lowering of the guidance has little to do with foreign exchange, as that headwind has seemingly improved slightly, the equity research firm said, adding that the outlook includes a number of additional costs, such as doubtful debts in the Middle East and cost restructuring.
Additionally, a Nexa implant launch without new features and Cochlear's expectation of a price premium paved the way for ongoing competitive pressures, while channel checks indicate the price premium is not sticking, especially in the US, as there has been no adjustment to the reimbursement for the device, Jarden said.
Jarden maintained a neutral rating on Cochlear with a share price target of AU$224.
Shares of the company were down more than 39% in recent Wednesday trade.