Sonova Seeing Strong Execution Collide With Macro Uncertainties

Nov. 29, 2022 3:31 PM ETSonova Holding AG (SONVF)AMFPY, GNNDY, SONVY, WILYY5 Comments
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Stephen Simpson
18.39K Followers

Summary

  • Sonova is still logging core growth in the mid-single-digits, but management has acknowledged some pressures from weaker high-margin sales and higher input/fulfillment costs.
  • Macro pressures could lead to consumers trading down or postponing hearing aid purchases in 2023/24, but Sonova's latest offering (Lumity) should drive share gains.
  • The bigger near-term challenge comes from the FDA allowing certain hearing aids to be sold OTC; this shouldn't really affect Sonova's core market, but there will be an adjustment period.
  • Mid-single-digit revenue and FCF growth can support a double-digit return, and the shares also look undervalued on the basis of near-term growth and margin potential.
Installation hearing aid on woman"s ear at hearing clinic, close-up, side view. Deafness treatment, hearing solutions

peakSTOCK/iStock via Getty Images

Sonova Holding (OTCPK:SONVF) (OTCPK:SONVY) (SOON.SW) has built an enviable track record in the hearing care space. Not only has the company built upon its leading position in the hearing aid market over the past decade (now holding around one-third

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Stephen Simpson profile picture
18.39K Followers
Stephen Simpson is a freelance financial writer and investor. Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds); now a semi-retired raccoon rancher. That last part isn't entirely true. Probably.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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