Buy Signal on Sonova Holding
Sonova is a CHF 13.6bn market cap and the world's leading provider of innovative hearing solutions. Its extensive product portfolio includes traditional hearing aids, cochlear implants and wireless communication systems. Revenues are derived from hearing aids (91% of sales) and cochlear implants (9%). The geographic breakdown of sales is made of Europe-Middle East-Africa (55%), United States (27%), Americas (8%) and Asia-Pacific (10%).
The return of customers to the outlets has been faster than expected and should be interpreted more as a sign of a lasting recovery than a catch-up effect, according to the company. The Covid-related recession should only have a limited effect on Sonova's customers, as they are mainly elderly people with a fixed pension and they benefit in many countries financial aid for the purchase of a hearing aid.
The American market is an exception, however, insofar as the economic situation of retirees is linked to financial markets. An effect felt by Sonova during and after the financial crisis. Regarding the competition from Bose or Apple, the management believes that it allows to awaken the interest of younger generations but that these products will not be able to replace those of Sonova. The higher the hearing loss, the better the quality of the device and the more important the advice.
Regarding its outlook, Sonova sees strong potential in China and India, where market penetration is currently only 2%, against 30 to 35% for the western markets.
Short term catalyst: US recovery, new products launch.
This signal looks consistent with the bullish momentum on Medtech segment.