COH - Cochlear Limited

[robusta]

Picked up some COH yesterday @ $45.85 There is still a lot of uncertainty in the short term with the recall but this is one stock that I am happy to put in the bottom drawer with the confidence that in 5-10 years profits will be much larger than today.

A nice rising dividend yield will also be a bonus.

 

[ROE]

Picked up some COH yesterday @ $45.85 There is still a lot of uncertainty in the short term with the recall but this is one stock that I am happy to put in the bottom drawer with the confidence that in 5-10 years profits will be much larger than today.

A nice rising dividend yield will also be a bonus.

I'm a little upset COH options doesnt exist any more ...well it did exist but not much liquidity and they pulled the plug on ASX last week...

during the recent madness you can get $10 premium for $45 strike price
make your buy price on COH $35 bucks if **** happen ....

1000 shares earns me 10K premium...

I only prepare to buy COH in their 30's so that suit me fine... any other price I leave it to mr Market

 

[McCoy Pauley]

Big gap down this morning. Looks like sub $45/share is on the cards. More and more brokers are downgrading their recommendations to "sell" on COH. Playing around with charts as a novice technical person suggests that ~$45/share is a support level for COH and a break beneath ~$45/share might spark some severe selling.

 

[robusta]

Big gap down this morning. Looks like sub $45/share is on the cards. More and more brokers are downgrading their recommendations to "sell" on COH. Playing around with charts as a novice technical person suggests that ~$45/share is a support level for COH and a break beneath ~$45/share might spark some severe selling.

Maybe you are right, with broker reports like this.

http://www.businessweek.com/news/20...-costs-may-exceeed-a-35-million-ubs-says.html

COH made ~$180 million NPAT last financial year. The $35 million does not bother me as long as COH maintains market leader status and growth into the future.

Still happy I bought @ $45.85 a few days ago.

 

[notting]

Going to make a fortune out of this one when it turns. When.
One I'd feel confident to bet everything on.
Not yet however.

 

[McCoy Pauley]

Maybe you are right, with broker reports like this.

http://www.businessweek.com/news/20...-costs-may-exceeed-a-35-million-ubs-says.html

COH made ~$180 million NPAT last financial year. The $35 million does not bother me as long as COH maintains market leader status and growth into the future.

Still happy I bought @ $45.85 a few days ago.

I think that's the broker downgrade which sparked the sell-off yesterday morning. The losses were trimmed as the afternoon wore on and last I checked, COH was up this morning (though not as much as the market overall).

FWIW, the brokers are simply guessing at what they think the recall will cost. COH advised shareholders late last month that they expect to update the market on the cost of the recall at the AGM later this month. Brokers need to write something to fill their reports to their clients. The upside risk is that the recall costs COH not very much at all and the share price spikes in response; the downside risk is that COH still cannot advise the market of the cause of the recall and therefore its costs.

I recall reading yesterday that COH believes the fault is being caused by moisture seeping into the implant. I think this was in a summary of a broker recommendation re-published by FN Arena.

 

[notting]

Looks a little better.
However tomorrow could be the day the US becomes officially a bear market so I'm not moving yet.

 

[robusta]

I think that's the broker downgrade which sparked the sell-off yesterday morning. The losses were trimmed as the afternoon wore on and last I checked, COH was up this morning (though not as much as the market overall).

FWIW, the brokers are simply guessing at what they think the recall will cost. COH advised shareholders late last month that they expect to update the market on the cost of the recall at the AGM later this month. Brokers need to write something to fill their reports to their clients. The upside risk is that the recall costs COH not very much at all and the share price spikes in response; the downside risk is that COH still cannot advise the market of the cause of the recall and therefore its costs.

Agree with you regarding brokers, COH has gone from Buy to Sell and IMO will go back to BUY again in the future.

I recall reading yesterday that COH believes the fault is being caused by moisture seeping into the implant. I think this was in a summary of a broker recommendation re-published by FN Arena.

Thankyou for that, I think this may be the same story in The Australian

http://www.theaustralian.com.au/bus...ant-malfunctions/story-fn91v9q3-1226158493439

 

[McCoy Pauley]

It looks to me like that $45/share level has held firm. Big bounce this morning of more than 5% so far on no news. That makes me a little suspicious.

 

[GRYPHON80]

It looks to me like that $45/share level has held firm. Big bounce this morning of more than 5% so far on no news. That makes me a little suspicious.

This is my theory, with the volatility in the market investors that bought in today considered Cochlear is undervalued (to where it was before the crash) & safer option to other stocks in other sectors. Past week it has been trending up while others have been up & down. Good Defensive stock that looks like it has it's investor confidence back. If we get good news out of Europe & the US today & it does not drop on Monday I think it has turned the corner & who ever is on it should enjoy the ride.

 

[McCoy Pauley]

AGM held this morning. The Chairman reports that the estimated cost of the voluntary recall will be between A$130-A$150 million and the after tax cash impact will be in the range of A$20-A$30 million. COH won't know the precise cost of the recall until the end of calendar 2011.

That's because COH doesn't appear to know precisely why the implants are failing.

The board has decided to increase the first-half dividend to A$1.20/share, partly franked.

COH's share price is down around 5.0% this morning.

 

[McCoy Pauley]

COH closed only about ~1% lower yesterday after all that and it's basically recouped everything it lost yesterday so far this morning.

 

[robusta]

Picked up some COH yesterday @ $45.85 There is still a lot of uncertainty in the short term with the recall but this is one stock that I am happy to put in the bottom drawer with the confidence that in 5-10 years profits will be much larger than today.

A nice rising dividend yield will also be a bonus.

SP $57.98 today, I am fairly happy however I do wish I threw everything into COH 20 days ago.

 

[McLovin]

I started buying this last Friday, I didnt think it would turn as hard as it has. I'm still only about half filled but I'll wait for a pullback before I buy anymore.

 

[McCoy Pauley]

It's been a tremendous bounce over the last few weeks or so. I picked up some more COH shares at $48.90/share and I wish I'd thrown some more money at it (although, to be practical about it, I spent enough on COH).

Given that the chart has almost gone in a vertical line, I'm cautious about a severe pull-back though.

 

[notting]

Personally I don't think there will be a pause till it's kissing 60 and even then I'm talking pause.

 

[Mr Editor]

Picked up some COH yesterday @ $45.85 There is still a lot of uncertainty in the short term with the recall but this is one stock that I am happy to put in the bottom drawer with the confidence that in 5-10 years profits will be much larger than today.

A nice rising dividend yield will also be a bonus.

Congrats, you picked up Cochlear at probably the last time it'll be at that price. I would've bought some if I were quicker.

Cochlear was oversold so much, but since management are being really ambiguous about the details of the recall, I'm going to hold off buying for a bit. In the long-term though, this is just going to be a tiny blip in the share price

 

[McLovin]

Congrats, you picked up Cochlear at probably the last time it'll be at that price. I would've bought some if I were quicker.

Cochlear was oversold so much, but since management are being really ambiguous about the details of the recall, I'm going to hold off buying for a bit. In the long-term though, this is just going to be a tiny blip in the share price

[my bolding]

Your blog appears to contradict your post...

Critics were at their most vocal on the day immediately following the announcement of the recall, when details on the recall were very ambiguous. But now that management has a clear idea of the total expenses of this entire fiasco, the element of risk that many were fearful of has been mitigated.

Good blog too.

Looking at my notes on COH there a lot of the same points as in your blog post. So I guess we're either both wrong or both right!

 

[Mr Editor]

[my bolding]

Your blog appears to contradict your post...



Good blog too.

Looking at my notes on COH there a lot of the same points as in your blog post. So I guess we're either both wrong or both right!

Thanks for pointing out that inconsistency, though what I meant is that while management has an idea of the expenses of a 1% failure rate of the CI512 product, they haven't even mentioned what exactly is the failure rate now. What do they estimate it to be? Could these failures be merely a precursor of many more? Does management's $130-$150 million provision take these questions into account? These are lingering questions that make me hesitant to buy right now.

And besides, the stock's now a little over what I estimate to be its intrinsic value, so I'm no longer in any rush to buy COH shares.

 

[skc]

Thanks for pointing out that inconsistency, though what I meant is that while management has an idea of the expenses of a 1% failure rate of the CI512 product, they haven't even mentioned what exactly is the failure rate now. What do they estimate it to be? Could these failures be merely a precursor of many more? Does management's $130-$150 million provision take these questions into account? These are lingering questions that make me hesitant to buy right now.

And besides, the stock's now a little over what I estimate to be its intrinsic value, so I'm no longer in any rush to buy COH shares.

The $150m was just direct cost based on the announcement. The two big risks as you rightly pointed out are loss of market share and continued failure of current stock of implanted units.

If COH wasn't priced so dearly by the market in the good times it may have worth a punt. But I just don't feel like paying high PE for something that just showed you the risks inherent in a single product company...