After 12 years at the helm, Cochlear (ASX:COH) chief executive Dr Chris Roberts has announced he will leave the company in August. Cochlear implant sales tripled under Dr Roberts’ leadership, while net profit and the share price increased four-fold.
Chris Smith, Cochlear’s head of North American operations, will succeed him. Mr Smith joined Cochlear in August 2004 and has led the US operations for almost as long as Dr Roberts has been CEO.
"It is time to hand over the leadership baton ... The company is ideally placed to grow and continue bringing the gift of hearing to many more people around the world," Dr Roberts said.
Mr Smith has a Bachelor of Science from Texas A&M University and “more than 20 years' experience in the medical device industry specifically, and healthcare in general in the United States including assisting Warburg Pincus, a direct equity healthcare investor in identifying market opportunities for investment,” according to the company website.
Mr Smith has his work cut out for him. Although Cochlear is by far the largest in the industry – it’s three times larger than Advanced Bionics’ cochlear division – the company has been losing market share for several years.
In February, we sold our position in Cochlear from the model Growth Portfolio after holding for more than a decade. The stock was just $19.04 when we pulled the trigger on 16 Mar 04 and has returned 18% a year, including just over $25 in dividends.
However, Cochlear shares now trade on a price-earnings ratio of 34 and offer a partially franked dividend yield of just 2.5%. Until we see improvement in implant unit sales and market share, we need a wider margin of safety than the current share price affords.
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