Swiss Stocks: Hearing the world with Sonova Holding

Sonova Holding is one of the leading providers of hearing aids, a solution to the growing, worldwide concern of hearing loss and one of the main healthcare Swiss stocks. What does the company stand for, and does it make an interesting investment?

Key takeaways about Sonova Holding Stock

  • Sonova holding’s mission is to create a world where everyone can hear the world around him.
  • Over 1.5 billion individuals that cannot hear well according to the World’s Health Organization, with around 430 million needing rehabilitation services.
  • The global hearing aids market was worth $9 billion in 2019 and is expected to reach $13.38 billion by 2027.
  • The company trades at 45.1 times earnings, which is below the medical equipment industry average of 51.8. Earnings remain strong with a sales growth forecast of 10.29% per year.

 

Company's profile and mission: giving volume to the world

Sonova Holding is a Swiss company headquartered in Stäfa, Zürich and one of the top healthcare Swiss stocks. It is one of the leading providers of innovative hearing care solutions. The group has a few owned brands through which they operate, namely Advanced Bionics, AudioNova, Hansaton, Phonak and Unitron. They offer a wide range of solutions for impaired people, such as hearing aids, cochlear implants, wireless communication products and professional audiological care.

Their mission is to pursue a world where each and everyone can enjoy sounds and music, leading a life without hearing limitations. They founded the “Hear the World Foundation”, with the mission to create a world in which everyone can hear the music of the world.

Their service segmentation goes as follows: on one side, they address the hearing instrument segment, which is divided into two subparts, the hearing instrument business, and the audiological care business.

On the other side, they also address the cochlear implant segment, which is an operation where a neuroprosthetic device surgically implanted. The device bypasses the normal acoustic hearing process and replaces it with electric signals that directly touch the auditory nerve.

The group now employs a 14,000 strong workforce and consists of 30 constituent companies, with research labs in Switzerland, Canada and USA and manufacturing plants in Switzerland, Vietnam, and China.

 

The hearing loss market

The hearing loss market is an important one, with over 1.5 billion individuals that cannot hear well according to the World’s Health Organization, with around 430 million needing rehabilitation services. By 2050, these numbers are expected to rise to 2.5 billion and 700 million, respectively.

In economic terms, the global hearing aids market size was at $9 billion in 2019 and is expected to reach $13.38 billion by 2027, due to long-term socio-economic forces. Unlike we might believe, it is also a very diverse market which requires a broad range of solution, as not all hearing issues arise from the same source.

There is a growing urgency to address this market, as the unaddressed hearing loss is extremely expensive. The total cost to communities and government worldwide is $980 billion, which makes any solution to prevent, identify and treat hearing loss issues very cost-effective.

 

The importance of sounds and hearing in our everyday life

Whether we notice it our not, we are constantly stimulated by sounds around us. The birds are singing, a car passes by, we listen to music in our headphones while a plane flies over our heads. While we may tend to think that vision is our central sense, our hearing processes about 50 impressions per second, which is twice as many as our eyes.

If back in the days, hearing was used to detect the arrival of a predator, it remains useful today: the predator only took the form of a car. Despite a safer world, hearing remains a crucial part of human experience, both for enjoyment and safety.

96% of hearing aid users stated that they led a better-quality life. 91% found that it helped them for their job, a third estimated that they earned a higher salary since they could hear better. Finally. A majority reported less physical and mental stress as well as a better sleep quality.

 

 

Sonova holding's growth and stock analysis

With a market capitalization of $15 billion, Sonova Holding is already a large company. For the fiscal year 2019-2020, the company generated sales of CHF 2.92 billion, up from CHF 2.76 billion in 2018-2019 and a net profit of CHF 231 million, down from CHF 262.4 million the previous year. We can also note that the operating free cash flow jumped, showing very financially healthy operations and room for further investments, or reducing debt.

 

Key figures from Sonova Holding's 2019-2020 annual report

Key figures from Sonova Holding's 2019-2020 annual report

 

The company has seen a continuous growth over the last 15 years, according to their latest annual report. This is likely supported both by their various acquisition, as well as with the rising need for hearing aids. There remains room for growth, as we can notice relatively small sales in Asia and Latin America, which could potentially be massive growth drivers.

 

Sonova Holding’s share price over the last 3 years

Sonova Holding’s share price over the last 3 years

 

The company trades at 45.1 times earnings, which is below the medical equipment industry average of 51.8. Earnings remain strong with a growth forecast of 10.29% per year.

For other Swiss stocks and companies, you might want to have a look at our other Swiss Series articles.

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