WDH Falls as HSBC Sees Average Prices Sliding: Copenhagen Mover

William Demant Holding A/S reversed yesterday’s gains after HSBC said the biggest Nordic hearing-aid maker may not be able to stop a slide in average sales prices with its newest high-end product.

WDH fell as much as 1.4 percent to 474.20 kroner. The stock declined 0.9 percent to 476.90 kroner at 1:32 p.m. in the Danish capital with 47,147 shares traded. Daily trade has averaged 119,214 shares in the past six months.

“The question will be whether WDH can generate enough sufficient organic growth to reverse the negative price trend with its new premium product,” HSBC analysts Hendrik Lofruthe and Jan Keppeler said in a note to clients. The latest earnings results were “disappointing,” they said.

The Smorum, Denmark-based hearing-aid maker began selling the Alta series in January. The device is essential to stopping the decline in average prices and triggering share gains, HSBC said. Increased competition and cuts in government reimbursement programs have depressed sales prices, it said.

HSBC lowered its recommendation to “underweight” from “neutral” and cut its price target by 7.8 percent, to 470 kroner. The bank cut its 2013-2014 estimates, forecasting sales growth of 8.6 percent and earnings before interest and tax as a percentage of sales of 20.8. WDH said Feb. 26 it sees organic revenue growth in wholesale of hearing aids exceeding market growth by 3-5 percentage points in local currencies.

“We consider the current valuation to be demanding in light of the dull outlook,” HSBC said. It’s too early to conclude the Alta series will “reverse negative growth trends, and “expectations are high and markets subdued,” it said.

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