Market has priced Fisher & Paykel Healthcare at perfection, say analysts

Fisher & Paykel Healthcare chief executive Lewis Gradon at the F&P Healthcare in East Tamaki. Photo / Dean Purcell

Shares in New Zealand's third largest listed company Fisher & Paykel Healthcare fell slightly this morning, despite the company posting another record result.

The business, which makes respiratory care products, is on track to reach $1 billion in operating revenue next year.

For the year ended March 31, the business reported net profit after tax of $190.2 million, up 12 per cent.

Operating revenue was $980.8m, up 10 per cent on the previous year with 87 per cent of this coming from recurring items such as consumables and accessories.

Despite the result which was at the upper end of its forecast, shares fell by almost 4 per cent in early trading. They had bounced back slightly by the afternoon, trading down 1.2 per cent at $13.19.

Hamilton Hindin Greene analyst Jeremy Sullivan said although revenue missed analyst expectations slightly, it was still a good result.

"Sometimes share prices just get a little bit ahead of themselves, and given the rise the stock has had over the last 12 months, it's arguably priced for perfection, so any weakness there would see them come off a bit," he said.

Slade Robertson, managing director at Devon Funds Management, said the market reaction was also based on the company's guidance for the year ahead.

"The result was in line, but the guidance for next year was lower that the market expected. The hospital business remains strong but the sleep business is currently seeing slower growth, particularly in mask sales," Robertson said.

Craigs Investment Partners head of private wealth Mark Lister reiterated these comments.

"It's hardly a big miss but this is how share prices operate - they factor in the future and react accordingly," he said.

The company has been a consistent outperformer on the NZX, with a market capitalisation of $7.6b.

Fisher & Paykel managing director Lewis Gradon said over the year, revenue from hospital products had risen 14 per cent to $572.1m, while homecare rose 4 per cent to $398.1m.

Inside the Fisher & Paykel Healthcare factory in East Tamaki. Photo / Dean Purcell

He said growth in homecare wasn't as strong as previous years however new products in this area would help boost revenue in the coming year, and the result overall was pleasing.

"Our consistent long-term strategy has again delivered strong revenue and earnings growth over the past financial year and, over this same time period, our products and systems were used in the treatment of an estimated 13 million patients around the world," he said.

The business has approved a final dividend of 12.5 cents per share, taking the total dividends for the year to 21.25 cents per share - an increase of 9 per cent on the previous year.

Gradon said the company was well positioned to meet the growing demand for products around the globe.

The company said assuming the NZ dollar did not change, revenue is forecast to reach $1.05b this year with profits expected to grow another 10 per cent to $210m.