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Cochlear shrugs off slump with new tech trial

Emma Rapaport  |  10 Oct 2018Text size  Decrease  Increase  |  
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Australian biotech giant Cochlear (ASX: COH) has announced plans for a fully implantable cochlear implant trial. The development would be a significant advance in implant technology.

A single-site, 11-patient study will collect data associated with the performance and safety of the totally implantable Cochlear implant technology. The implant can be used with or without an external sound processor to provide people with 24-hour hearing. 

The technology used in the clinical trials differs from existing Cochlear devices as it includes an implanted microphone, an implanted rechargeable battery, and an implanted sound processer. 

"This means that the patients can choose between using an external sound processor or taking it off and relying on the implanted microphone and internal sound processor, while still maintaining hearing function," the statement said.  

The development of the implant is in its "very early stages" and commercial availability is not expected for years, the company said. However, it remains a long-term development goal.  

Australian markets strategist, Saxo Capital Markets Australia Eleanor Creagh said Cochlear's announcement took the market by surprise. Yesterday the company ended 5.1 per cent lower after loudspeaker manufacturer Bose received approval to enter the US market with a new hearing aid.  

While she described today's announcement as positive, Creagh remains concerned that competitive pressures will continue to weigh on prices. 

"I would be hesitant to buy into this after today's announcement," she said.  

Healthcare doctor

Healthcare weighs on ASX 

The news comes as ASX-listed healthcare stocks took a collective tumble on Tuesday due to the sharp rise in US 10-year government bond yields causing a selloff in growth stocks. 

"The high growth cohort of stocks – which includes tech and healthcare stocks – got hit the hardest as those valuations come from the prospect of high future earnings. As the discount rate rises, that brings down the value of those future earnings," Creagh said. 

"Given that the uptick in yields was so sharp, it's spooked the market and caused investors to become a little bit more jittery, and then we saw those high growth stocks selling off." 

At close yesterday, Healthcare giant CSL (ASX: CSL) was down $8.91, or 4.52 per cent to $188.21, weighing heavily on the sector, while Cochlear, ResMed (ASX: RMD), Sonic (ASX: SHL), and Ramsay Health Care (ASX: RHC) were also down. 

Cochlear gained 2.6 per cent in mid-day trading to reach $197.59.  

Falls across the tech sector included Appen Ltd (ASX: APX) and Altium Ltd (ASX: ALU) - both down around the 5 per cent mark.  

On CSL, Creagh said investors should consider CSL’s historical share price value when evaluating the slide. 

"It is important to remember that CSL is a high-quality company and to put the pull back into context, we're only really trading where we were in June. I think the market got a little bit ahead of itself,” she said.

"The stock now is coming back into line and I think now for CSL we should start to see that buying support coming in around these levels.”

Creagh added that she sees expects CSL to experience a strong run throughout the next financial year.

 

 

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Emma Rapaport is a reporter with Morningstar Australia, based in Sydney.

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

is an editor for Morningstar.com.au

© 2020 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

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