With Customers Skewed Heavily to Older Individuals, 2020 Will Be Difficult for Hearing-Aid Firms

We're revising down our forecasts and fair value estimates for all three hearing-aid manufacturers in our coverage universe. With the customer base skewed to older individuals, the current Covid-19 epidemic will likely be very disruptive for these firms, and we do not anticipate the demand to return until early to mid-2021. We're lowering fair value estimates for Sonova and Demant by 10% to CHF 169 and DNK 178 respectively, and GN Store Nord by 5% to DNK 269. We're maintaining our narrow-moat ratings for all three firms. At current prices, Demant represents the most compelling investment opportunity, with shares still not fully recovered from the hacking incident and now further depressed by the sell-off.