Hearing-Aid Stocks Face Uncertain Road After Game-Changing Deal
(Bloomberg) — A potentially game-changing deal in the hearing-aid industry is poised to increase pressure on some of Europe’s worst-performing health care shares.
Amplifon SpA’s plan to acquire GN Store Nord A/S’s hearing-aid unit triggered big moves in both stocks this week, and raised concerns that it will dent rival producers such as Sonova Holding AG and Demant A/S in a sector grappling with slow demand and rising competition.
The deal would see Milan-listed Amplifon add hearing-aid manufacturing to its operations, which currently focus mainly on retail and distribution. This is expected to weigh on rival producers including Sonova and Demant, given Amplifon currently sells their products in its stores.
“With Amplifon fully vertically integrating, we expect the company to meaningfully reduce products it buys from other manufacturers,” Citigroup Inc. analyst Veronika Dubajova wrote in a note this week.
While GN Store Nord shares have surged and Amplifon has slid on what some analysts viewed to be a high transaction price, Sonova and Demant have extended their year-to-date declines. The deal is seen as negative for both firms, “which made up approximately 20% and 15% of Amplifon’s wallet respectively,” according to Barclays Plc analyst Hassan Al-Wakeel.
Shares of Amplifon, which will pay 12.6 billion kroner ($1.9 billion) in cash and issue 56 million shares, are down 23% since the transaction was announced, extending their year-to-date drop to 41%.
Investors were “taken off guard” by the firm shedding its pure retail status, a “perceived key strength” in the hearing-aid industry, according to analysts at Jefferies, who downgraded the stock to hold from buy.
The sector faces broad challenges. People have been delaying hearing-aid purchases and replacements amid a softer macroeconomic backdrop, along with changes to reimbursement policies in some countries, according to RBC Capital Markets analyst Jack Reynolds-Clark.
“A robust recovery in market demand is needed for the stocks to rebound,” Reynolds-Clark said. “Although we think that the secular drivers of demand remain, such as an ageing population with increasing wealth, demand shows limited signs of recovery in the near term.”
Lower-cost alternatives and over-the-counter devices have added to the challenges, according to audiologist Lynda Wayne in a recent note published by Citi analysts. Meanwhile eyewear maker EssilorLuxottica SA — whose Nuance Audio line of glasses are embedded with hearing technology — are targeting the mild-to-moderate hearing loss segment, regarded as an under-penetrated part of the market.
Short sellers are also taking note. Demant’s shares out on loan, an indication of short interest, surged to roughly 21% of free float as of Tuesday, according to data from S&P Global Market Intelligence. It’s currently the most-shorted stock in the Stoxx 600 Health Care Index. Bearish wagers against Amplifon have decreased, though stock out on loan is still almost 9% of free float.
Demant, GN Store Nord, Amplifon and Sonova all declined to comment when contacted by Bloomberg News.
“Industry growth has been lackluster with focus on pricing pressures in US, weak consumer spending, and sizeable earnings downgrades” at several companies, said Mark Hiley, founder of the boutique equity research firm The Analyst.
Such challenges increase the pressure on Sonova’s outlook when Chief Executive Officer Eric Bernard, who took the helm in September, addresses investors and analysts on Monday. As part of an ongoing strategy review, the company is examining all of its business areas in detail, Bernard told Swiss financial newspaper Finanz und Wirtschaft last month.
Demant has already provided a weaker-than-expected outlook for 2026.
Still, there’s room for some optimism. Bernstein analyst Susannah Ludwig sees potential for a rebound in the hearing-aid sector this year, helped by pent-up demand from people who have delayed upgrading their devices, as well as new product launches in the second half of 2026.
“People can delay upgrades to their hearing aids,” Ludwig said, drawing a comparison with the range of time it takes consumers to upgrade their smartphones. “The longer the slowdown extends, the more you’re building up some pent-up demand on upgrades.”
–With assistance from Jonas Ekblom and Antonio Vanuzzo.
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