Jefferies on Wednesday changed its stances on the continent’s two biggest hearing-aid groups, moving Demant to a "buy" recommendation from "hold" while trimming Sonova to "underperform" from "hold." The brokerage said the shift reflects what it views as an unsustainable valuation divergence and a weakening of some of Sonova’s recent growth tailwinds.
Under the new view, Demant was assigned a price target of DKK245, which implies roughly 32% upside from the company’s last close at DKK186.20. Sonova’s target was lowered to CHF155 from CHF215, implying about an 18% downside versus Sonova’s last close of CHF189.35.
Valuation framework and comparatives
Jefferies noted that Demant is trading at about a 20% discount to Sonova on 12-month forward price-to-earnings, compared with a 10-year average discount of roughly 5%. Conversely, Sonova currently carries an approximate 25% premium to Demant versus a historical average near 10%, according to the brokerage.
To arrive at its DKK245 target for Demant, Jefferies blended two valuation approaches. An equally weighted discounted cash flow produced a DKK278 per-share valuation using an 8% weighted average cost of capital and a 2% terminal growth rate, while a multiples-based route applying a 20% discount to EU MedTech comparables yielded DKK211. The blended target corresponds to about 19x calendar-year 2026 P/E, near 10% below Demant’s 10-year average.
Demant: revenue catalysts and cost program
Jefferies’ forecast for Demant shows FY26 group sales of DKK25.6 billion and adjusted EBIT of DKK4.38 billion, implying a 17.1% margin. Those estimates sit within the company’s own guidance range of DKK4.1 billion to DKK4.5 billion for adjusted EBIT, the brokerage noted.
Key drivers flagged by Jefferies include the Oticon Zeal ITE-R device, which has been available in the U.S. since January 2026, and a broader platform rollout targeted for the second half of 2026. In addition, Demant’s roughly DKK500 million annual cost-savings initiative, with about DKK250 million expected to hit in FY26 and affecting roughly 700 employees, supports the upgraded view, the broker said.
On an earnings call, Demant management said, "The low end of that range is characterized as the most conservative assumption of an already conservative guide," a comment cited by Jefferies.
Sonova: trimmed estimates and tailwind annualization
For Sonova, Jefferies trimmed its estimates slightly, projecting FY25/26 group sales of CHF3.85 billion and normalized EBITA of CHF762 million at a 19.8% margin, versus prior estimates of CHF3.87 billion and CHF765 million.
The broker highlighted two notable tailwinds that are expected to annualize in 2026: Sonova’s re-entry into Costco, estimated to contribute about 2% of sales and normalized EBITA, and a U.S. Veterans Affairs pricing uplift that increased channel sales in value by more than 20% from May to December 2025, adding roughly one percentage point to normalized EBITA growth. Jefferies’ data show Sonova holds more than 50% share in the VA channel, which accounts for approximately 5% of group sales - about double the exposure of Demant and GN.
Sonova is scheduled to present a strategy update on March 23. Jefferies observed that CEO Eric Bernard, COO Roberto di Fiore and APAC President Bernd Wagner all have deep Asia-Pacific experience, saying an APAC-focused strategy "could translate into accelerated sales growth" but that such a focus "may raise questions over profitability impact."
Outlook and investor considerations
Jefferies’ repositioning underscores the brokerage’s view that the market’s valuation spread between Demant and Sonova had grown too wide relative to historical norms and that company-specific developments - product commercialization and cost savings for Demant versus tailwind annualization and strategic focus for Sonova - justify differentiated ratings and price targets. Investors monitoring medtech and healthcare-equipment segments may see these calls as indicative of changing risk-reward dynamics within the European hearing-aid market.
Note: An AI-based stock-selection tool referenced in this context evaluates Demant across numerous metrics and highlights opportunities based on current data; the tool has previously identified other high-performing names, according to promotional material cited in the source text.