Cochlear Ltd (COH): 2H14 sales better than expected, but Cochlear implant unit growth still missing

Cochlear Ltd (COH): 2H14 sales better than expected, but Cochlear implant unit growth still missing. COH's sales were ahead of our expectations by around 3%, EBIT by around 12% and NPAT by around 12%. This was a credible result after the disappointing 1H14, although we note underlying EBIT was still down 16% for FY14 and underlying NPAT down 17%. Cochlear implant unit growth is still missing -sales declined 3%. Ex-China tender, CI unit sales increased 1%. We think market growth is around 5-10%, and likely towards low-end of this range, implying COH has lost global market share. However, market share appears to be stabilising as 2H14 Cochlear implant unit sales were up 3% ex-China, following a 1% decline in 1H14. Whether this will keep improving in FY15 remains to be seen, particularly given ongoing competitive pressures. Our recommendation is a Sell.