Daily ShareChat: Fisher & Paykel Healthcare

Although Fisher & Paykel Healthcare's annual results were in line with expectations, management's "very downbeat" guidance for the year ending March 2010 has led Morningstar to downgrade its forecasts.

With the New Zealand dollar at 60 US cents, the company expects to achieve net profit between $75 million and $80 million. "This is well below our net profit forecast of $104 million," Morningstar says.

In late May, the respiratory humidification and obstructive sleep apnea (OSA) products company reported a 76% rise in annual net profit to $62.2 million.

"We are not too concerned about this year's earnings but are more focused on the health of the business in general which remains in good shape," Morningstar says.

"We are comfortable with the firm's strategy to invest for the future, even if it means sacrificing short-term earnings," it says.

New products launched during the year just gone should help the company regain market share in the OSA market while its respiratory humidification business will continue to deliver strong underlying growth, it says.

"We also look forward to margin uplift from savings in Mexico and expansion into other geographies."

Fisher & Paykel Healthcare is setting up a manufacturing facility in Mexico to raise capacity and free up resources at its Auckland head office.

BROKER CALL:  Morningstar rate Fisher & Paykel Healthcare (NZX: FPH ) as HOLD.

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