Cochlear's (ASX:COH) fiscal 2026 underlying net profit after tax (NPAT) beat consensus estimates by over 4% largely due to a AU$20 million reduction in selling, general, and administrative expenses in the latter half of the year, Jarden said in a Tuesday note.

The revenue mix weighed on the company's gross margin, which at 70.6% came in well below guidance of 72%. This was impacted by lower-than-expected developed market revenue and increased low-tier sales in China, the equity research firm said.

"All up, the quality of [fiscal 2026] is worse than anticipated due largely to mix," it said.

However, the company's fiscal 2027 guidance for underlying NPAT of AU$330 million to AU$350 million is in line with consensus forecasts, with further restructuring costs expected in the current fiscal year.

"We expect this stock should trade favorably on this outlook," Jarden said. It maintained a neutral rating on Cochlear with a target price of AU$169.

Cochlear shares gained 6% in recent Tuesday trade.