In today’s daily we have covered stock research on Cochlear (Expensive).

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S&P 500 was down 0.26points or 0.01%on Monday and closed at 1962.87. U.S. stocks ended a quiet session on Monday essentially unchanged as investors found few reasons to keep buying following a six-day rally in the S&P 500, though merger activity lifted energy shares. General Electric fell 1.1 percent after clinching the $17 billion purchase of Alstom SA’s energy assets, its biggest acquisition ever. FMC Corp. dropped 4.9 percent after cutting its 2014 profit forecast. Integrys Energy Group Inc. jumped 12 percent after Wisconsin Energy Corp. agreed to pay $5.7 billion for the company. Micros Systems rose 3.4 percent as Oracle Corp. offered to buy it for a $68 a share.

The FTSE 100 in London also declined. It fell 0.4% on the day with its heavily weighted mining stocks tracking upbeat Chinese data and limiting overall losses. Oil prices were lower but investors were keeping a wary watch on violence in Iraq and its potential to disrupt oil output. Tokyo’s Nikkei 225 rose 0.6% to its highest point since late January before slipping aback to close 0.1% higher on the day. Hong Kong’s Hang Seng index fell 1.7%.


S&P 500 Daily Chart (Source – Thomson Reuters)
 
S&P ASX 200was up by 33.8points or 0.62%on Monday and closed at 5453.3 points. Chinese factory data came in strong to get the week started on a strong note. The “flash” June reading for the purchasing manager’s index in China was 50.8 in June up from 49.4 in May and above the 49.7 forecast. APN Property Group (APD) announced the establishment of a new $120 million property fund.  BWP Trust has entered into a contract to acquire a development site in Brendale, Queensland on which Bunnings will develop a Bunnings warehouse. Australand (ALZ) announced that it has entered into an agreement to sell the Civic Tower in Sydney for $136 million.

International Goldfieldshas encountered significant exploration success in Brazil. Envestra has advised that it now expects to record a profit after Tax for the year ended 30 June 2014 of around $150 million. Buru Energy has advised that Laurel Formation Tight Gas Pilot Exploration Program has been approved by the Department of Mines and Petroleum. Metcash has reported full year results in which sales revenue has risen 3.2% and the reported profit after tax has declined 17.9%. TEN Network rose on media reports that a  US based private equity group is looking to launch a takeover bid for the struggling broadcaster.


ASX 200 Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:-



Stock of the Day – Cochlear (COH)
 
Cochlear will relaunch its Nucleus C1500 series of cochlear implant, the Nucleus Profile, after voluntarily recalling the product from the market in September 2011 owing to concerns related to malfunction of specific electronic components. The company will launch the Nucleus Profile across Europe first. The new system contains the contour Advance Electrode (C1512), the thinnest implant body on the market which will support a wider range of surgical techniques.
 


COH Products (Source – Company Reports)

The product has been approved by TUV, Rheinland, a global provider of certification services and should be rolled out into other geographies pending regulatory approval. Cochlear has flagged the introduction of electrodes onto the series over coming months. This follows the recent FDA approval of Nucleus Hybrid L24 cochlear implant system, which combined acoustic amplification of low frequencies with the electrical stimulation of high frequencies in one device.


COH Dividends (Source – Company Reports)

Cochlear dominates the cochlear implant market and despite recent encouraging results from Advance Bionics (Sonova), remains the innovation leader in novel technologies. Current research linking hearing loss with cognitive decline in the elderly bodes well for increasing penetration of the adult market. The stock is trading at a significant premium reflecting a history and ongoing prospects of strong earnings per share growth, technology leadership, attractive cash flow generation and low debt levels.


COH Daily Chart (Source – Thomson Reuters)

Cochlear has built a reputation for superior quality and reliability. Some surgeons in larger markets refuse to implant any other device for fear of product quality issues. The differentiation is built on an historic track record of reliability which others will take many years to replicate. We believe the stock is expensive at its current price and would review the stock at a later date.

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