Sonova Falls on Increased Hearing-Aid Competition: Zurich Mover

Sonova Holding AG dropped the most in five months after HSBC said the world’s largest hearing-aid maker faces more regulatory pressure and increased competition.

Sonova fell 3.7 percent, the biggest decline since Nov. 7, to 108.20 Swiss francs as of 5:30 p.m. in Zurich, after HSBC reduced its recommendation on the stock to neutral from overweight. About 271,000 shares changed hands, more than twice the average daily volume of the past three months.

Denmark and the Netherlands have cut reimbursements, while competition has increased with new products from William Demant Holding A/S and GN Store Nord A/S, HSBC wrote in a note to investors today. Those two companies together with Sonova have 60 percent of the $4.5 billion market, the brokerage estimates.

“While we like the industry’s structural growth drivers such as the aging population, low penetration rates and lack of substitutes, the short-term outlook for hearing aid manufacturers appears somewhat less bright,” HSBC said.

Sonova, which reports figures for the 12 months through March on May 21, said previously that it expects a 7 percent to 9 percent gain in sales and a 15 percent to 20 percent increase in earnings before interest, taxes and amortization, based on constant currencies.

The company will have a difficult time meeting analysts’ expectations, which are at the upper end of the company’s forecast, HSBC said.