F&P Health shares soar on bullish outlook

AuthorTamsyn Parker
Published date21 January 2023
Publication titleWeekend Herald
The shares ended the day up by 5per cent or $1.26 at $26.25

Fisher & Paykel Healthcare told the market it expects operating revenue to be within the range of approximately $1.55 billion to $1.60b.

That would be down 8per cent on its revenue of $1.68b for the 2022 full year, but 7per cent above a $1.47b market consensus of analysts according to Bloomberg data.

Matt Montgomerie, an equity analyst at Forsyth Barr, said the update was quite strong.

“The market has been pre-positioning over the last three, four, five weeks for an upgrade but even acknowledging that, I think today’s revenue guidance was stronger than what I and clearly the market had thought it was going to be.”

F&P attributed the upgrade to increased sales in China due to COVID and the early start to the flu season in North America, although this now appears to be easing.

Montgomerie said it was hard to know the extent of China’s COVID outbreak, but the strength of the revenue forecast showed that organic or underlying high-flow revenue was still strong, reflecting the increased use of the extra hardware that was sold because of the COVID outbreak over the past two or three years.

“The reported numbers are misleading in China so it is hard to know the extent of how bad COVID is right now but for sure it’s a driver of the upgrade.”

Gross margin guidance of about 61per cent was unchanged but using consensus margin assumptions, that implies around $293 million in earnings before interest and tax versus the $274m consensus among analysts.

Montgomerie said the company had retained its gross margin and operating expenditure guidance, which was very much consistent with Forsyth Barr estimates.

Revenue would still be down on the prior period but it was only in mid-August last year that the company came out with a reasonable downgrade, so this was quite a change in the past four or five months, he added.

Full-year operating revenue was $1.68b in the prior period.

That was already down from $1.97b in the March 2021 year.

Shane Solly, portfolio manager at Harbour Asset Management, described Fisher & Paykel Healthcare’s latest revenue guidance as an “impressive upgrade”.

“It has been interesting investing in Fisher & Paykel Healthcare in the last little while,” said Solly.

“The company has some amazing products. It has been really hard for them to provide insight as to where they have been travelling...

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