FPH - Fisher Paykel Healthcare Corp

[kasper]

Good article by Tim Hunter in NBR if you can access

The madness of crowds
Expectations of the gains from Covid for Fisher & Paykel were bullish, until they weren't.

https://www.nbr.co.nz/hunters-corner...ess-of-crowds/


From our vantage point in what was once the future, we can see the market miscalculated F&P Healthcare's performance by billions of dollars, which is a lot. The result for some investors was probably costly, so it's worth looking back to see what we can learn.

Only costly if you sell for a loss otherwise it will be back over $30 in due course.

[Basil]

Yeap, I am very wary of really crowded trades in super high multiple priced for perfection market darling stocks.  What can possibly go wrong they all cry and all I can think is if you pay "priced for perfection" multiples its only a matter of time before the imperfections show themselves up.

[Basil]

Only costly if you sell for a loss otherwise it will be back over $30 in due course.

I have this strange sense of Deja Vu.  Maybe you said that about some other former market darling 😜

[kasper]

I have this strange sense of Deja Vu.  Maybe you said that about some other former market darling 😜

You could say that about SUM others also that reached $15.69 a while back, those punters will need to wait a bit also and so the list goes on.

[winner (n)]

Updated the chart in that NBR article -- added 2023 based on forum posters/analysts share price and earnings forecasts

Could say nothing much learnt - heading to the same outcome

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[Surfclub]

The F&P performance is sort of like the All Blacks losing all of their last years games, in a regular season with a full book of matches. Hope it gets back is not a strategy.  Times may have been tough but where was the risk management and FX management plan.  What do you think.  Top stock by capitalization in NZX.  In everybody's kiwisaver etc.  What do you think?     

[winner (n)]

must be tough being a guru broker analyst churning out spreadsheets and regurgitating company news to come up with a guess as to what the share price might be worth.

Guesses for FPH at the moment range from $17.10 to $26,00 .... realists to optimists some might say

But at the end of the day it seems their guesses follow the share price - both up and down - share price goes down we better lower our guess etc

And to think many are enraptured with broker forecasts.

Here's how consensus target prices have moved with the FPH share price

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[Basil]

WOW...that's a damming image.   

[Ferg]

Spending on capex to expand capacity is usually a good sign:
https://www.nzx.com/announcements/398048

In short: FPH buying 105ha in Karaka for $275m subject to OIO approval for the building of a new campus.

[winner (n)]

Goodness gracious - FPH close at $18.90 yesterday

Not just a 52 week low but its share price is back to where it was about 3 years ago (2019)

Not surprising really as current profits are about the same as back then

Still valued at an outrageously high PE - >50 times forecast earnings

The big question is can FPH live up to these high expectations to justify that valuation multiple .... or will come this time next year it will have been 'rerated' down to something more reasonable with a share price of $10 to $15

[Surfclub]

imho can only fall in these macro conditions, US Fed policy, World Geo Politic, NZRB, NZ Finance Minister Giveaway Policies emptying the Countries financial resources, no indication over years FPH management adds value, no turnaround seen. 

As many individuals position deteriorates cashing in underperforming investments like many managed fund and shares like FPH will be seen as an easy positive solution to maintain lifestyle in a time of cash shortfalls.

[KW]

Personally, I believe that all the share price gains over the last 2.5 years are ephemeral, much the same as house prices over that period.  I am now going back 3-5 years in charts, to see what price the company would probably have been had it not been for the Covid insanity.  If you do that for FPH you obtain amazing clarity.  Its simply returned to its long term trend line, and is now probably on track to test some old support levels as the bear market takes hold.

NOTE:  pricing is in Aussie dollars as this is a chart of the ASX FPH (as are all my charts)

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[Basil]

Goodness gracious - FPH close at $18.90 yesterday

Not just a 52 week low but its share price is back to where it was about 3 years ago (2019)

Not surprising really as current profits are about the same as back then

Still valued at an outrageously high PE - >50 times forecast earnings

The big question is can FPH live up to these high expectations to justify that valuation multiple .... or will come this time next year it will have been 'rerated' down to something more reasonable with a share price of $10 to $15

As you know, I have been calling this as a $15 stock for quite some time, from back when it was ~ $30 to be exact.  If it weren't for the fact this is N.Z.'s largest leading blue chip stock with widespread institutional holdings supported by ongoing inflows from Kiwisaver contributions I believe it would already be back at that level.

I believe we are going to see a fundamental rerating in the year ahead in a similar vein to how the former market darling ATM was rerated.

Downgrades always comes in 3's (Balance)

For portfolio protection in a bear market this is a great and very liquid stock to short in my opinion.

[BlackPeter]

Interesting chart ... and you might well be correct re FPH (assuming that the additional Covid business was advance purchase, which may or may not be true).

Obviously - this additional hardware in the hospitals might as well give the sales of consumables (that's where the margins are) a permanent boost, but we shall see.

Not so sure I would underwrite your statement re the real estate market, but this is another thread.

In my view was the money the RB's of the world printed just the fuel for the inflation ... and real estate just happened to inflate faster than (e.g.) food or now energy and soon wages. It all inflates and prices will go up and stay there. Of course - at some stage inflation will get back under control (arguably with real estate we are already there), but this does not mean that prices will (significantly) drop from here, they will just slower rise from their new base.

Anyway - back to FPH ...

[Left Field]

No worries folks..... it's an up day today....(so far.)