Sonova Seeing Strong Execution Collide With Macro Uncertainties

Sonova Holding (OTCPK:SONVF) (OTCPK:SONVY) (SOON.SW) has built an enviable track record in the hearing care space. Not only has the company built upon its leading position in the hearing aid market over the past decade (now holding around one-third share), but the company generates strong margins, cash flows, and return metrics like ROIC. Now that legacy of operational excellence is colliding with some meaningful end-market uncertainties, as the 2023 macro-outlook deteriorates and the company will be coping with a new regulatory environment in the key U.S. hearing aid market.

I’m expecting high single-digit revenue growth from Sonova over the next three to five years, slowing toward a 5% to 6% growth rate over the longer term, and I’m expecting EBITDA margins to expand into the low-to-mid-30%s over the next few years. Between discounted cash flow and growth/margin-driven EV/revenue, I do think these shares offer enough upside to merit a closer look from investors.

 

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Sonova Seeing Strong Execution Collide With Macro Uncertainties