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F&P Healthcare shares hit record on improved guidance

Monday 14th October 2019

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Shares of Fisher & Paykel Healthcare Corp rose above $18 for the first time today after the company raised its revenue and earnings guidance. 

F&P Healthcare climbed 8.1 percent to a record $18.37 this afternoon, up from $17 at the open. The share price is up about 43 percent this year from $12.84, while five years ago the price was $9.24. Its market capitalisation is currently sitting at $10.55 billion. 

“When companies produce consistent earnings growth over many years, then a certain premium gets baked into the share price and the price is on account of that solid history,” says Grant Davies, an investment advisor at Hamilton Hindin Greene. 

The medical device maker, which reported a record net profit this year, upgraded revenue and earnings guidance today after gaining US regulatory clearance for its new sleep mask earlier than expected. 

F&P Healthcare expects operating revenue for the 12 months to 31 March 2020 to come in at $1.19 billion, from a previous estimate of $1.17 billion. 

“The Australians are getting into it in a big way,” Davies says. “There is momentum behind the company which is somewhat helped by the dollar.”

Net profit after tax is now forecast at $255 million to $265 million, up from earlier guidance of  $245 million to $255 million. The new estimate assumes an exchange rate of about 63 US cents to the dollar for the rest of the year. About half of F&P Healthcare’s operating revenue is in US dollars. 

“A bit of currency tailwind and good momentum for the company means investors are going to be very pleased,” Davies says. 

The company lifted guidance after receiving regulatory clearance to sell its ViteraTM breathing mask in the United States. The face mask treats obstructive sleep apnea and was not expected to be released in the US until next year. 

“Clearance of Vitera for sale in the US this month is sooner than we had previously guided and this has been a meaningful contributor to the increase in our guidance,” says managing director and chief executive Lewis Gradon in an announcement. 

Gradon says the mask has already been received well in Australia, Canada, New Zealand and Europe. 

The new guidance also incorporates a refinement of its expected research and development tax credit, F&P Healthcare says. 

In 2019, the company posted record operating revenue of $1.07 billion, up 9 percent. Net profit after tax was up 10 percent to $209 million. 

In February it announced it reached a settlement with ResMed over its longstanding patent litigation.

(BusinessDesk)



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