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Investing.com -- RBC Capital Markets has initiated coverage of four major European hearing-aid manufacturers with a cautious near-term stance, citing slowing volume growth and deteriorating pricing conditions despite structurally attractive long-term fundamentals.
The brokerage assigned an “outperform” rating to premium manufacturer Sonova with a CHF250 price target, while Demant, GN Store Nord, and Amplifon were initiated at “sector perform” with respective targets of DKK250, DKK110, and €15.
RBC highlights that the global hearing market totals $31 billion, comprising $6 billion wholesale, $20 billion retail, $4 billion cochlear implants, and $0.7 billion diagnostics. Although the sector has historically grown 3% to 6% annually, the analysts note that “volume growth is currently trending 1-3ppts below this, but we expect it to return towards the historical range within 1-2 years.”
Long-term expansion remains underpinned by aging populations, with demographics expected to drive “3-5% unit growth in hearing aids over the long term, with growth set to be fastest in China (RBCe).”
Still, the brokerage maintains a skeptical view on pricing, describing the outlook as unfavorable and expecting “long-term negative pricing” as public payors dominate Europe and emerging markets with lower price points expand.
The brokerage underscores geographic contrasts: Europe accounts for roughly 45% of global volumes but prioritizes value-for-money public tenders, while the US represents around 35% of volumes and about 50% of global value due to higher average selling prices and greater private-channel mix.
Among the four companies, RBC identifies Sonova as its favored name, citing “market leadership positioning and technological differentiation.”
The company commands 31% of the $8 billion wholesale market and 6% of the $20 billion retail market. Phonak, its flagship brand, represents “47% of sales.”
Forecasts include 5.7% wholesale growth, 4.6% retail organic growth, and 3% acquired retail growth, supporting 10% EBIT CAGR and 12% EPS CAGR, with expected 3 percentage points of margin expansion.
Sonova also maintains the strongest balance sheet, with 1x net debt/EBITDA falling to 0.7x by 2027. RBC states that if geared to 1.5x, it could return “approximately CHF1.8 billion…roughly 14% of market cap.”
Demant, described as a high-quality vertically integrated manufacturer, holds 25% wholesale share and 6% retail share but faces limited scope for mid-term share gain.
Its €700 million acquisition of KIND at 2.7x sales pushes leverage to 2.9x, with de-leveraging of 0.7 turns expected in 2026. Free cash flow conversion remains above 50%, though buybacks are paused.
GN Store Nord combines hearing aids with Enterprise and Gaming. Enterprise markets remain weak, showing negative 8% CAGR from 2022 to 2025.
Hearing aids contribute 39% of sales, Enterprise 42%, and gaming 19% via SteelSeries. Leverage stands at 4.2x net debt/EBITDA, improving gradually as markets recover.
Amplifon , the global retail leader with 15% share, faces soft end markets. Italy and Spain represent more than 30% of 2025 sales and are declining, while France benefits from reimbursement-driven volume strength. The company operates at 1.7x net debt/EBITDA with about 40% cash conversion and has launched a €150 million buyback program.
RBC said that “ major platform launches don’t drive meaningful share gains,” instead highlighting speech-in-noise performance and miniaturization as key competitive factors.
Retail consolidation continues globally, with smaller bolt-ons typically priced at about 2x sales, and focused on the U.S., France, Germany, and China.