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Fisher n Paykel Healthcare

By Staff Reporter

Friday 12th August 2011

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The steep decline in Fisher & Paykel Healthcare’s (FPH) share price has seen equity analysts Morningstar upgrade their recommendation to BUY, with an intrinsic valuation of NZ$3.30. Morningstar expects that FPH’s “outlook for the year ending 31 March 2012 is better than the previous year from a constant currency perspective”. It expects that Obstructive Sleep Apnea should show 15% growth due to the introduction of masks and accessories during the year while Respiratory Humidification growth is expected to be between 10-15%, underpinned by consumables.

Morningstar also expects that FPH’s “Dividend Reinvestment Plan program will result in share dilution, and consequently earnings per share growth will lag behind net profit growth.”

Dan Stratful broker at Investment Research Group (IRG) says that FPH has provided guidance to the market that reported profit is expected be between NZ$62 million to NZ$76 million based on a NZD/USD exchange rate of between US70c to US80c. "However with the kiwi trading well into the 80’s and expected to stay there it looks like full year net profit will come in at the lower end of that range". “FPH is a quality New Zealand company that is experiencing high growth when measured in constant currency. But a high kiwi dollar means that its reported results are lagging its constant currency results.”

A recent report also suggests that FPH’s selloff is due to competitor ResMed stealing market share off FPH in some of its overseas markets.

Contact IRG on 0800 437 8489

Dan Stratful

Authorised Financial Adviser (AFA)

dan.stratful@irg.co.nz

**A disclosure statement is available, on request and free of charge by calling 0800 437 8489.

Broker recommendations are sourced from Morningstar equity analysts.

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