Sonova Holding AG (SOON), the world’s largest hearing-aid maker, gained the most in four months after a UBS AG analyst upgraded the shares to buy, saying investors are underestimating the growth potential of the market.
The stock rose as much as 4.1 percent, the steepest intraday gain since April 19. The shares traded 3.5 percent higher at 109.90 Swiss francs at 9:34 a.m., giving the Staefa, Switzerland-based company a market value of 7.4 billion francs ($7.8 billion).
UBS’s Martin Wales raised his recommendation on the stock from neutral, saying he’s more confident in the company’s medium-term potential, assuming volume growth in the hearing-aid market of as much as 4 percent a year. Average selling prices have been dropping 1 percent to 2 percent annually, though investor concern about price pressure is “overblown,” Wales wrote in a note to investors.
“Gross margins have held up in the face of such pressure, suggesting cost efficiency is keeping up with pricing moves,” Wales said. He estimates earnings before interest, taxes and amortization could reach almost 25 percent of sales by 2017.
UBS has a price estimate of 130 francs on the stock, raised from 98 francs previously. The number of shares traded was 23 percent more than the three-month daily average.
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