NZX50 falls 0.6% as F&P Healthcare downgrade creates uncertainty for investors

Monday 3rd September 2018

The S&P/NZX 50 index fell in early trading as a profit warning by Fisher & Paykel Healthcare introduced new uncertainties for investors.

The benchmark index declined 42.29 points, or 0.5 percent, to 9,270.91 as at 12.30pm in Wellington, led lower by F&P Healthcare after the breathing mask maker warned of lower annual earnings due to the latest round of patent litigation with rival ResMed.

F&P Healthcare fell 3.6 percent to $15.80 after the Auckland-based company said net profit will be between $205 million and $210 million in the year ending March 31, 2019, compared to an earlier forecast for earnings of $215 million. It blamed the downgrade on the added cost of litigation after ResMed filed new actions in the US International Trade Commission and US District Court for the Southern District of California. The shares closed at a record last week and are still up 10 percent so far this year.

"It's been putting in a very strong performance ahead of the announcement and made new highs," said Grant Williamson, a director at Hamilton Hindin Greene in Christchurch. "The announcement wasn't too negative, but just enough to bring in the profit takers."

A2 Milk shares fell as much as 3.3 percent after the milk marketing firm acknowledged new Chinese e-commerce rules. That's since reversed since Australia's stock market opened and the shares were recently up 0.5 percent to $12.68. The stock has jumped 57 percent so far this year.

Like F&P Healthcare, Williamson said the a2 Milk announcement triggered some investors to lock in profits.

"There's a number of investors out there who are a little bit nervous around any uncertainty and are happy to sell in the smallest whiff of slightly negative news," he said.

The NZX 50 spent last week above 70 on a relative strength index basis, a level technical analysts view as a sign an asset is poised to fall. The stock index fell to 64.87 on an RSI basis today.

(BusinessDesk)

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