Morgan Stanley has raised its rating on Fisher & Paykel Healthcare (FSPKF, Financial) to Overweight from Equal Weight, setting a new price target of NZ$38.90, up from the previous NZ$36.70. This upgrade follows a roughly 4% drop in the company's share price after their FY25 results, attributed to weaker than anticipated FY26 guidance. Despite this, Morgan Stanley believes FSPKF presents appealing medium to long-term growth in earnings per share.
FSPKF Key Business Developments
Release Date: May 27, 2025
- Operating Revenue: $2.02 billion, up 16% on FY24, 14% in constant currency.
- Net Profit After Tax: $377.2 million, up 43% on FY24, 30% in constant currency.
- Hospital Operating Revenue: $1.28 billion, up 18% on FY24, 16% in constant currency.
- Homecare Operating Revenue: $739.9 million, up 13% on FY24, 11% in constant currency.
- Gross Margin: 62.9%, increase of 181 basis points, 129 basis points in constant currency.
- Operating Margin: 25.2%, increase of 379 basis points, 260 basis points in constant currency.
- R&D Expenses: $227 million, 14% growth, 11% of revenue.
- SG&A Expenses: $534 million, increase of 8% in both reported and constant currency.
- Operating Cash Flow: $549 million, up 28% from last year.
- Capital Expenditure: $103 million, down from $339 million last year.
- Net Cash: $200.5 million as of March 31.
- Final Dividend: $0.24 per share, 2% increase from last year.
- Full-Year Dividend: $0.425 per share, up 2% from last year, 66% payout of full-year profit.
- Foreign Currency Impact: Positive impact of $39 million on NPAT compared to last year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fisher & Paykel Healthcare Corp Ltd (FSPKF, Financial) reported a 16% increase in operating revenue, reaching $2.02 billion for the full year.
- Net profit after tax rose by 43% to $377.2 million, showcasing strong financial performance.
- The company successfully launched new products, including the Nova Nasal mask and Airvo 3, contributing to growth in both hospital and homecare segments.
- Gross margin improved by 181 basis points, driven by manufacturing and overhead efficiencies.
- Operating cash flow increased by 28% to $549 million, reflecting robust profit growth and efficient cash management.
Negative Points
- Global tariffs are expected to impact gross margin by approximately 75 basis points annually, posing a challenge to margin improvement.
- The company faces variability in hospital revenue due to seasonal respiratory hospitalizations, which could affect financial outcomes.
- Operating expenses grew by 10%, which, although expected, indicates rising costs that need to be managed.
- The OSA mask revenue growth slowed in the second half due to competitive pressures, highlighting market challenges.
- The company anticipates a longer timeline to achieve its target gross margin of 65% due to ongoing tariff impacts.
