EUR 168.89 For Business Accounts Only

Demant (Hold, TP: DKK210.00) - Revised 2019 guidance maintained

The Q3 trading update showed better than expected growth in the hearing device business despite the cyber-attack. Implants and diagnostics also beat our forecasts. The revised 2019 guidance was maintained, and the share buy-back programme will be resumed. We have raised our 2019–2021e EPS, and in turn our target price to DKK210 (200), but reiterate our HOLD as the medium-term impact of the hack remains unknown. Hearing device growth hacked as expected. Demant continues to expect DKK600m–700m in lost sales due to the hacking attack, mainly related to the hearing device business (c50/50 between wholesale and retail). While organic growth for the hearing device business in H2 to date has been flat despite a solid first half-year (c4% organic growth in H1), this was slightly better than we expected. We still cannot say if the launch impact from Opn S is just delayed or if it will never reach its full potential due to the hack, but we note the delay in the roll-out of the Philips HearLink. Implants and diagnostics continue their strong momentum. Implants and diagnostics have been little affected by the hack, and both businesses have continued their strong performances in H2 to date. The implants business has seen accelerating growth so far in H2, from c17% organic growth in H1, due to strong sales of the new Ponto 4 sound processor (consensus c11.1% reported for H2). The diagnostics business has also continued its organic growth momentum from the first half-year (c7% organic growth in H1), driven by continued strong growth in the US and a significant tender win in Q3 (consensus c4.2% reported for H2).