F&P Appliances is seen as a takeover target. Photo / Glenn Jeffrey
F&P Appliances is seen as a takeover target. Photo / Glenn Jeffrey
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Brokerage First NZ Capital has downgraded its outlook for exporter Fisher and Paykel Appliances because it expects the company's sales to the US will decline.
In a research note published this week, analyst Sandra Urlich has lowered forecasts for the company's profit this year by 8.4 per centto $59.3 million.
She has also dropped her earnings forecast for next year by 9.4 per cent to $69.3 million.
"The revision follows our concerns about the continued dramatic slowing of appliance sales in the US," Urlich said.
American appliance sales figures showed an 11.4 per cent fall in shipments for March compared to March last year.
The US is F&P Appliances' largest single market, accounting for about 38 per cent of sales.
First NZ cut its valuation of F&P Appliances valuation by 3 per cent to $3.30 a share and downgraded its recommendation on the stock from "neutral" to "underperform".
"Given the current M&A environment, F&P Appliances is likely to be underpinned in excess of what the near-term fundamentals imply," Urlich wrote.
In other words the company's share price is not expected to fall significantly because it is seen as being likely to become an attractive takeover target if it continues to underperform.
In February, F&P Appliances cut its profit forecast for the year to last month by 20 per cent, to between $60 million and $65 million.
Chief executive John Bongard said sales had been less than expected in Australia, margins had eroded in New Zealand and the firm had been out-muscled in the United States.
Shares in F&P Appliances closed down 8c at $3.52 yesterday.
