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Fisher & Paykel Healthcare (FPH) is expected to deliver another strong first half result with momentum heading into the rest of the year.
The respiratory appliance manufacturer's first half net profit for the period ended September was expected to be up 31 percent to $200 million, with revenue growth of 13 percent to just over $1 billion, when it reported its results on Wednesday 26 November.
The market was looking for an update on sales, US tariffs and a possible upgrade on the full year guidance, which was already sitting at the high end of the range.
Forsyth Barr senior analyst Matt Montgomerie said FPH was expected to lift the midpoint of its guidance range, though with some element of caution given uncertainties around northern hemisphere respiratory hospitalisations in the second half of the year.
The consensus for full year revenue was in a range of $2.15b to $2.25b, with net profit of $436m which, was near the top of its guidance range of $390m and $440m.
"Clearly, if they exceed what their guidance provided, but then also their full year guidance... yeah, would likely be a positive in this result," Montgomerie said.
Harbour Asset Management portfolio manager Shane Solley said a strong result could also see an increase in FPH's share price, which had underperformed the overall market so far this year.
"So year to date, Fisher & Paykel's share price is down 3.1 percent versus the broader New Zealand share market - up 2.6 percent," Solley said.
"So perhaps if the company comes in with a result that's within expectations, that might be enough for investors to revisit the company again."
Kiwi dollar a factor in the outlook
The weak New Zealand dollar at 56 US cents was also expected to give additional support to the company's outlook, with Standard & Poors forecasting the New Zealand dollar to remain at or under 60 US cents through to 2028.
"There is uncertainty clearly around currency, but also just the shape of hospitalisations in the U.S. in Europe, in the second half, which can move revenue around quite significantly year on year," Montgomerie said.
Still, FPH was a global leader in respiratory care in hospitals around the world, with a market share of more than 75 percent.
"And they are the pioneer of a number of these (respiratory) products, and have first mover advantage as a result," Montgomerie said, adding the company's success could also attract increased competition.
"That isn't particularly evident at the present time but... a risk over time is that there is competition within the hospital business that may erode or slow growth or erode margins or returns... that is the primary risk at the present time."
Competition in the consumer market was much tougher and dominated by large competitors, leaving FPH with about a 15 percent share of the global sleep apnea mask market.
Solley said the result would be "quite important" in providing an understanding of costs and how it was navigating a challenging time in global trade.
Steady outlook on tariffs
FPH's NZ-made hospital product exports were subject to a 15 percent tariff on their New Zealand hospital exports to the U.S.
"The tariff itself is not significant. So from from that point of view, they haven't made any knee jerk reactions to the tariffs... more or less treating it as an increased cost of doing business, rather than changing the mix of their operations or changing their pricing methodology, significantly," Montgomerie said.
However, he said FPH managed its business with a long-term focus.
"So in any event, we would expect them to make a very considered decision around the impact of tariffs."
$5 billion Karaka Campus development a highlight
Solley said the market would also be interested in learning more about FPH's plan to spend an estimated $5b to develop a second campus at Karaka, which was more than double the size of its current campus at East Tamaki.
Documents released by Auckland Council indicate the development would provide capacity for another 18,000 full-time employees across 13 buildings with a gross floor area of 319,000 square metres.
The company paid $275m for the 105-hectare site in 2022, which would be developed over the next 30 to 40 years.
