Shares in bionic ear maker Cochlear Ltd [ASX:COH] shot up this morning, gaining more than 3% to close near 12-month highs. Today’s price action pushes Cochlear’s year-to-date capital growth beyond 20%.
At yesterday’s annual general meeting, chairman Rick Holliday-Smith talked up Cochlear’s prospects. He pointed to new products in the pipeline and expressed confidence that Cochlear’s quality will win out over the cheap knockoffs manufactured for and by the Chinese market.
This has reassured investors that the company’s growth has continued into the second half of 2014…so the stock has continued to ascend.
Cochlear’s success marketing new products is impressive. But you should recognise that all biotech companies — even ones as large as Cochlear — are at the whim of regulators.
Long-term holders will cheer today’s price action, as the market seems to prefer established large-caps to more speculative stocks right now.
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But it’s hard to view this stock as undervalued, particularly when you consider the competition that Cochlear faces.
Cheers, Tim Dohrmann+
Small-Cap Analyst, Australian Small-Cap Investigator
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