Market close: How a weight loss drug is causing trouble for Fisher and Paykel Healthcare

Market heavyweight Fisher and Paykel Healthcare declined 63c or 2.85 per cent to $21.45, its lowest close since November 28 when the share price was $20.71.

A weight-reducing drug is causing trouble for Fisher and Paykel Healthcare as the New Zealand sharemarket chalked up its sixth successive fall.

The S&P/NZX 50 Index was on a downward slide all day and closed at 11,344.11, down 82.73 points or 0.72 per cent – its lowest level for nine months.

The index has now fallen 1.8 per cent for the year.

There were 42 gainers and 84 decliners on the main board, with 28.19 million shares worth $102.5m changing hands.

Market heavyweight Fisher and Paykel Healthcare declined 63c or 2.85 per cent to $21.45, its lowest close since November 28 last year, when the share price was $20.71.

Shane Solly, portfolio manager with Harbour Asset Management, said Fisher and Paykel was under pressure from a “phenom” called GLP-1, a pharmaceutical product that causes weight loss.

“Part of Fisher and Paykel’s applications is treating obstructive sleep apnea (OSA) which is associated with obesity. There is a question mark about whether people need to keep using OSA devices, and the market is wary about slowing sales of the devices.

“The GLP-1 drug has been wreaking havoc among healthcare stocks around the world. The OSA devices make up 30 per cent of Fisher and Paykel’s earnings and the company is making an investor presentation in the US next week, so we should learn more,” said Solly.

Fisher and Paykel’s nearest competitor, Australian-based ResMed, was down 1.21 per cent to A$23.54, having fallen from A$34 in early August.

Solly said the fall on the NZX was a delayed reaction to the weaker markets overseas. “The markets are on a rollercoaster and today we rolled off. We have got through the winter but we are not yet seeing spring in the capital market.”

He said some banks were talking about a further increase in the official cash rate by the Reserve Bank and this weighed on interest rate-sensitive stocks.

“There is a scrap going on between the interest rate and equity markets and interest rates are winning. The US 10 Year Treasury Note yield has gone above 4.2 per cent again to a five-year high,” Solly said.

Auckland International Airport was down 15c or 1.86 per cent to $7.91, and UBS Group AG has reduced the airport holding from 5.7 per cent to 1.42 per cent after selling 63 million shares. Meridian Energy decreased 13c or 2.45 per cent to $5.17.

Interest rate-sensitive property stocks Argosy was down 2.5c or 2.16 per cent to $1.13; Goodman Property Trust decreased 4c or 1.82 per cent to $2.16; and Kiwi declined 1.5c or 1.73 per cent to 85c.

Precinct Properties, down 1c at $1.165, has completed its $150m convertible notes offer. The 2026 notes carry an interest rate of 7.56 per cent a year and the 2027 notes 7.53 per cent.

Retirement village stocks Summerset Group declined 9c to $9.90, and Ryman Healthcare was down 6c to $6.46.

Port of Tauranga hit its lowest level in more than four years after declining 13c or 2.24 per cent to $5.68. It sat at $5.72 on April 14, 2019.

Retailers Briscoe Group shed 14c or 2.92 per cent to $4.66, KMD Brands declined 2c or 2.47 per cent to 79c; Michael Hill was down 2c or 2.06 per cent to 95c; and The Warehouse gained 4c or 2.34 per cent to $1.75. KMD, along with Skellerup and Pacific Edge, is being removed from the FTSE Index next week.

Other decliners were Vulcan Steel down 8cc to $8.66; NZ King Salmon Investments falling 1.1c or 5.73 per cent to 18.1c; Sanford shedding 10c or 2.51 per cent to $3.89; Millennium & Copthorne Hotels NZ giving up 6c or 3.16 per cent to $1.84; and My Food Bag slipping 1c or 5.71 per cent to 16.5c.

Freightways, down 11c to $8.30, will begin trading in its dual listing on the ASX market this Thursday.

Seeka declined 11c or 4.56 per cent to $2.30; Steel & Tube was down 4c or 3.39 per cent to $1.14; Restaurant Brands decreased 12c or 2.71 per cent to $4.30; and Ventia Services shed 10c or 3.33 per cent to $2.90.

Used car dealer 2 Cheap Cars rose 11c or 22 per cent to 61c after telling the market that strong trading in the first five months will likely push net profit for the 2024 financial year to the top end of the previous guidance.

The company has now upgraded full-year net profit to $5.2m-$5.7m, up from $4.2m-$5m. For the period ending August, 2 Cheap Cars expects revenue of $34.1m, gross margin of $8.1m (up 32 per cent on the same period last year), and net profit of $2.4m compared with $0.7m.

Other gainers were Mainfreight collecting 61c to $66.97; Infratil up 9c to $10.44; Vista Group rising 8c or 5.41 per cent to $1.56; Winton Land adding 5c or 2.22 per cent to $2.30; NZX increasing 2c or 1.77 per cent to $1.15; and Serko up 9c or 2.36 to $3.90.

Technology investment firm Enprise, unchanged at 62.5c, is making a one for five rights offer to shareholders at 50c a share. Enprise is aiming to raise $1.74m.