* Shares plunge on cut to profit forecast
* Delayed surgeries hitting demand for implants
* No provision made for lower sales outside China (Recasts and updates throughout with shares, analyst comment, coronavirus context)
By Nikhil Nainan and Paulina Duran
Feb 11 (Reuters) - Australian hearing implant maker Cochlear Ltd cut its full-year profit forecast on Tuesday, blaming the coronavirus outbreak as hospitals in China delayed surgeries to limit further spreading of the infection.
The surprise downgrade pushed shares in one of Australia’s most expensive stocks down by as much as 5.2%, their biggest one-day slide since October last year, to A$232 at the open before they regained some ground to a 1.2% drop. The broader market was up 0.6%.
Hospitals across China, Hong Kong and Taiwan have been deferring surgeries, including cochlear implants, as part of a host of measures to stem the spread of the virus and prevent panic.
“It has become clear that the coronavirus will impact the number of cochlear implant surgeries in Greater China, a top-five market for Cochlear,” Cochlear Chief Executive Dig Howitt said in a statement.
Cochlear lowered its underlying profit forecast for fiscal 2020 to between A$270 million and A$290 million ($180.50 million - $193.87 million), from an earlier forecast of A$290 million and A$300 million.
Cochlear did not provide further detail on its exposure to Greater China, but said it had factored in a “significant” drop in sales in the second half and it was unsure when surgeries might resume.
Credit Suisse estimated that Greater China accounted for less than 10% of group revenue in 2019 after its exposure was lowered in recent years by the loss of government contracts.
“With little information disclosed on the materiality of Greater China to COH’s earnings, the 6% downgrade to consensus (at the mid-point) suggests that the core business may also be experiencing weaker growth versus expectation,” Credit Suisse said in a note to clients.
Howitt said Cochlear had at least three months of most of its stock and did not expect any disruption to its supply chain to customers “at this stage.”
“We are confident that many of the delayed surgeries will progress once hospitals resume normal operations,” he said, noting a similar trajectory with the SARS epidemic nearly two decades ago.
The downgraded profit forecast is still 2% to 9% higher than the underlying net profit Cochlear reported last year.
JP Morgan noted that the issue was currently a short-term one affecting only sales in China this financial year, but the risk was that both the epidemic and resulting effects spread further afield.
“The concern ... is the potential for coronavirus to spread more widely in other regions, which would likely result in widespread deferrals,” JP Morgan analysts said in a note.
$1 = 1.4959 Australian dollars Reporting by Nikhil Kurian Nainan in Bengaluru and Paulina Duran in Sydney; Editing by Shailesh Kuber and Jane Wardell