Sonova deepens sell-off after lose major US client 📉

Shares of Swiss medical holding company Sonova (SOON.CH) are declining nearly 8% and slipping below key support as the company announced the loss of a major U.S. customer, which could hit its financial results in at least the first half of the year. Also Q1 results were mixed. However, Sonova didn't disclose the name of given US company:

• Analysts at JP Morgan, Jefferies and Vontobel indicated that the frm that Sonova does not want to disclose is one of the largest US wholesalers Costco (COST.US). Sonova's management conveyed in a statement that results were solid but not enough to dampen market sentiment;
• Pre-tax profit was CHF 840.4 million in Q1 2023, which beat analysts' forecast of CHF 859.7 million in a Vara Research survey. At the same time, however, Q1 sales rose 14.6%, below expectations of 15%-19%, suggesting that inflation is curbing demand for the company's equipment and services;
• Sonova said, however, that it still expects consolidated sales to grow 3%-7% in 2023-2024, and adjusted pre-tax profit excluding currency factors to rise in the 6%-10% range,
• In an interview with Reuteres, a Sonova spokesman indicated that the loss of a U.S. trading partner will be a hurdle in the first half of the year. The company is keeping a close eye on consumer trends in a challenging economic environment;
• The commentary on the results also read that full-year profit will likely be below expectations, and that it may take longer to return to the pace of robust growth given the loss of a customer in the US and inflation. This information did not please investors. If the loss of the Costco contract is confirmed - it could cost the company a significant reduction in revenue from the US market.

Sonova (SOON.CH) shares, W1 interval. The stock price was at January 2020 levels, just before the Covidian meltdown that hit demand for its services and products. The stock has settled below the SMA200 (red line) signaling that a test of trend strength around the 61.8 and 71.6 Fibonacci restracement is still possible. If the support set by the 2020 price reaction does not hold, a test of CHF240 per share will become realistic. Source: xStation5.