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Fisher & Paykel Healthcare Corp Ltd FPH

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Morningstar’s Analysis

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Fisher’s First Half Better Than Expected but Our Long-Term View Stands; FVE Unchanged

Shane Ponraj, CFA Equity Analyst

Analyst Note

| Shane Ponraj, CFA |

We maintain our NZD 24.00 (AUD 23.00) fair value estimate for narrow-moat Fisher & Paykel following first-half fiscal 2022 results. Despite cycling unprecedented demand for its hospital products, EBIT fell just 2% to NZD 302 million due to further surges in coronavirus late in the half. Nonetheless, we expect current elevated demand will eventually normalise due to increasing vaccination rates, new emerging alternative treatments for COVID-19, and many hospitals now equipped with adequate treatment capacity. Accordingly, while we lift our combined EBIT forecast over the next two years by 7%, we leave our long-term estimates broadly unchanged. No formal fiscal 2022 guidance was provided given the current volatility in demand. Our revised fiscal 2022 revenue and EBIT forecasts of NZD 1,802 million and NZD 568 million respectively, imply a similar revenue contribution in the second half but further margin contraction. This is in line with management commentary regarding rising freight costs and expenses for new employees annualising. Shares remain overvalued as we see pandemic-induced demand as unsustainable.

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Company Profile

Business Description

Fisher & Paykel Healthcare is one of the three largest respiratory care device companies globally. It is the market leader in hospital use humidifiers, masks and related consumables and the number three player in the at-home treatment of sleep apnoea using respiratory devices. Both the hospital and homecare markets for respiratory devices are growing strongly in the developed markets in which Fisher & Paykel has a presence. The company earns 42% of its revenue in the U.S., 32% in Europe, 18% in Asia-Pacific and the remaining 8% in emerging markets. Fisher conducts its own R&D and has thousands of patents and pending applications. It manufactures in New Zealand and Mexico and has a multichannel distribution model.

15 Maurice Paykel Place, East Tamaki
Auckland, NTL, 2013, New Zealand
T +64 95740100
Sector Healthcare
Industry Medical Instruments & Supplies
Most Recent Earnings
Fiscal Year End Mar 31, 2022
Stock Type
Employees 6,897