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Cochlear (ASX:COH) share price pops on exciting FY24 profit upgrade

The Cochlear Limited (ASX: COH) share price is up 4% after the ASX healthcare share revealed a strong FY24 earnings update.

Cochlear describes itself as “the global leader in implantable hearing solutions.” It has provided “more than 600,000 implantable devices, helping people of all ages to lead full and active lives.”

FY24 profit guidance upgrade

The ASX healthcare share has upgraded its earnings guidance after better-than-expected in cochlear implant revenue for the six months to December 2023.

Cochlear said it’s expecting underlying net profit for FY24 to be between $385 million and $400 million, which would represent an increase of between 26% to 31% compared to FY23.

This upgrade is 8% above the mid-point of the prior guidance of between $355 million to $375 million, which the company told investors about in August 2023.

First-half revenue has increased 25%, or growth of 20% in constant foreign exchange terms, to $1.1 billion, with an underlying net profit of $192 million. Those are strong numbers, which are seemingly helping the Cochlear share price.

At this stage, these results are based on management accounts that are subject to audit review and board approval. In other words, they are not completely finalised yet. The half-year result is expected to be released on 19 February.

Management commentary

The Cochlear CEO and President Dig Howitt said:

Cochlear implant trading conditions have been strong across the first half, with units growing 14%. We have maintained the market share gains made in FY23 and market growth has continued to be robust across both developed and emerging markets, as well as all age segments – children, adults and seniors. The key change to our expectations is that we now expect to achieve 10-15% growth in our cochlear implant units for FY24 compared to the high single-digit growth expected in August.

Final thoughts on the Cochlear share price

The Cochlear share price has gone up by 40% and it is on a very high price/earnings (P/E) ratio. Cochlear is a great business with a very strong position in the market, which is enabling it to capture more demand after COVID-19 limited operations and other activities.

If the number of implant units keeps growing, then the Cochlear share price could keep rising, but it’s priced for a lot of ongoing success, and it’s already a big business.

For me, there are better value, smaller ASX growth shares that have more potential at the current price.

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