UBS is not surprised by the company’s decision to raise up to $850m, considering the sudden deterioration in the operating environment and the likelihood of paying out $380m in penalties following the lost patent infringement case.
UBS updates modelling assumptions and reduces first half FY21 estimates for cochlear implant sales, delaying recovery into the second half.
The broker notes earnings forecasts remain positive throughout and, while there may be potential downside to operating cash flow, this should not pose an issue for the balance sheet. Sell rating maintained. Target is reduced to $145 from $158.
Sector: Health Care Equipment & Services.
Target price is $145.00.Current Price is $168.00. Difference: ($23.00) – (brackets indicate current price is over target). If COH meets the UBS target it will return approximately -16% (excluding dividends, fees and charges – negative figures indicate an expected loss).
