Fisher & Paykel Healthcare Corporation Limited
FPH Details
Material Updates: Fisher & Paykel Healthcare Corporation Limited (ASX: FPH) manufactures and sells medical device products and systems to treat obstructive sleep apnea and applications in acute care, respiratory care, and surgery. Recently, Pinnacle Investment Management Group Limited, and Hyperion Asset Management Limited recently became substantial shareholders with ~5.01% and ~5.09% voting shares in FPH, respectively.
Operational Results of 1HFY22 (ended 30 September 2021):
- FPH has started constructing a third manufacturing facility in Mexico and commenced earthworks on its fifth facility in New Zealand in 1HFY22.
- In August 2021, FPH launched the Visairo mask in the US and introduced the Evora full mask for OSA in New Zealand and Australia in October 2021.
Comparative Key Metrics; (Analysis by Kalkine Group)
Key Risks: The company faces technological risks, restricted patient access in hospitals, uncertain trial outcomes for new products, and the risk of elevated freight costs.
Trading Update & Outlook:
- FPH reports that the revenue of the hospital consumables segment for 2HFY22 is currently pursuing like the revenue in 1HFY22.
- FPH plans to host a conference call and publish FY22 results on 25 May 2022. Operating revenue guidance is confirmed between ~$1.675 - ~$1.70 billion at current exchange rates for FY22.
Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: The stock of FPH gave negative return of ~28.95% in the past three months and a negative return of ~38.02% in the past six months. The stock is currently trading near to its 52-weeks’ low level of ~$18.430. The stock has been valued using the P/E-multiple-based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount than its peers’ mean P/E multiple, considering the risk of elevated freight rates, impact on gross margins, continuing risk of Omicron & COVID-19 spread, and increased growth investments. For this purpose of valuation, a few peers like Cochlear Ltd (ASX: COH), Ramsay Health Care Ltd (ASX: RHC), Integral Diagnostics Ltd (ASX: IDX), and others have been considered. Considering the current trading levels, growth in sales of OSA masks in 2HFY22, continuous investment in R&D, expansion of manufacturing facility, a larger installed base of hospital hardware, a robust new product pipeline, an indicative upside in valuation, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $18.970, up by ~1.661%, as of 20 May 2022.
Markets are currently trading in a highly volatile zone due to specific macroeconomic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
FPH Daily Technical Chart, Data Source: REFINITIV
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.
Technical Indicators Defined: -
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.
Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.
There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.
You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.
The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.
Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.
Please also read our Terms & Conditions and Financial Services Guide for further information.
On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.
Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.