Daily ShareChat: Fisher & Paykel Healthcare

By Jenny Ruth

Thursday 26th November 2009

Fisher & Paykel Healthcare's underlying performance remains strong despite a currency-related downgrade in earnings, says Forsyth Barr analyst Guy Hallwright.

The company has changed its currency assumption from 67 US cents to 74 cents for its second half and cut its earnings guidance by $10 million to between $65 million and $70 million.

"Guidance at the beginning of the year assumed a 60 cents rate, which would imply a $25 million to $30 million downgrade," Hallwright says. "A revision of only $10 million indicates that the underlying buisiness is performing better than expected."

Fisher & Paykel's first-half net profit rose 31% to $37 million.

The company has a strong growth outlook in both its obstructive sleep apnoea business (whose underlying sales rose 20% in the first half) and its respiratory and acute care products (whose first-half sales were up 14%, adjusted for $10 million in one-off sales), Hallwright says.

Expansion into new segments could potentially triple the company's addressable market, he says.

Still, Fisher & Paykel shares already trade on fairly high multiples and a lower currency is needed for the shares to perform strongly from here, he says. Hallwright is expecting a strong New Zealand dollar will persist through 2011. "With less hedging in place, this will impact profits."

BROKER CALL: Forsyth Barr rate FPH as accumulate.

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