FPH - Fisher Paykel Healthcare Corp

[Left Field]

Closing today at 52 week high of $27.87 (up 5%) on reasonable volumes......

NBR article (behind paywall)  reporting FB has upgraded expectations as FPH about to enter the anaesthesia device market.  "Will anaesthesia prove to be the next big thing for FPH?"

https://www.nbr.co.nz/investment/will-anaesthesia-prove-the-next-big-thing-for-f-and-p-healthcare/

[BlackPeter]

The temperature in this kitchen is getting a bit hot for the food thats on offer at the moment, might be time to go to the longue for a wee lay down until the temp comes down a bit.

Quite right. If the market is overheated its so easy to get carried away and join the herd burning their money ...

While FPH is clearly a pristine and well managed company, it feels the market is prepared to pay currently a huge premium for a company not just priced for perfection, but priced for exponential growth from here. Backwards PE (10y) is 68, forward PE (3 yrs) 52 ... and this comes with an earnings forward CAGR of 4.2. One would need a significantly higher earnings CAGR to justify these astronomic PE's.

Hmm. Maybe the markets are preparing for COVID 24? Who knows, this or some other favourable black swan event might help ...

[Greekwatchdog]

For Bars report yesterday

We upgrade our rating on F&P Healthcare (FPH) to NEUTRAL from UNDERPERFORM. Our analysis suggests a large long-term opportunity in the anaesthesia market. This reflects: (1) strong industry feedback, (2) large market size, and (3) current use case/body of clinical research, underpinning a solid market penetration ability (which we expect to grow through time). Anaesthesia products represent only ~4% of our FY24 revenue forecast but are at a critical point for investors to take notice, with potential for the anaesthesia opportunity to be a key driver for the investment case over the next decade. While relative valuation to peers is ahead of history, it looks fair accounting for FPH's superior near-term earnings growth. We take comfort in the longer-term anaesthesia opportunity which underpins robust valuation support.

What's changed?
Earnings: Negligible near-term changes, more material longer-term upgrades given higher anaesthesia revenue.
Target price: Increased to NZ$25.90 (from NZ$23.45) given peers change and higher medium/long-term earnings expectations.
Rating: Upgraded to NEUTRAL (from UNDERPERFORM).
Large total addressable market (TAM) but current evidence suggests relatively low penetration
Our analysis suggests up to ~270m global procedures using general anaesthesia/procedural sedation (up to ~120m in developed markets). Based off current clinical evidence, using Australia as a guide, and clinician feedback, the primary use case today is for high-risk patients, but we expect the patient pool to grow over time as more population specific evidence is published. Today FPH's penetration is ~0.5% (~1.0% developed markets), our FY38 forecasts assume penetration of ~3-4% (developed markets of ~5-7%).


Industry feedback is constructive
Feedback from 12 users of the anaesthesia products is very consistent: (1) physicians 'generally speaking' love the product; (2) usage is primarily on high-risk patients/difficult airways (use is ~5% of total patients today, albeit there is a range); (3) there is no real perceived benefit in other standard procedures; thus, only clinicians need it for a small portion of patients at this stage (particularly given the current clinical evidence); and (4) there is little/no competition.


Anaesthesia underpins solid DCF valuation support
We now assume FY38 anaesthesia patient volumes of ~8.5m (from ~5m), which drives ~+5-7% EPS upgrades. This underpins robust 'cash flow' valuation support, helps allay our concerns on the new apps consumables growth factored into the share price, and provides greater confidence in consensus' consumables revenue growth long-term. We expect the share price to remain constrained given absolute valuation and relative valuation to peers is slightly elevated, and thus refrain from a more positive recommendation.

[Left Field]

Thanks for posting the FB report. Very helpful.

[Left Field]

FPH SP been a great ride over the last 6 months.

[Left Field]

Crikey, big crossing on close today 204,806 shares at $28.47 (it wasn't me)

[Breezy]

Crikey, big crossing on close today 204,806 shares at $28.47 (it wasn't me)

Yeah P/E about 62 now, that's starting to roast.

[Left Field]

Yeah P/E about 62 now, that's starting to roast.

Not wishing to defend FPH's sky high P/E however, as we appreciate, P/E is based on historic revenue figs and it seems the market is getting excited by possible projected earnings if FPH obtains a foothold in the anaesthesia market. (ForBar estimating 5 to 7 % EPS upgrades see post #167)

FPH now sitting at valuations of 10 x's revenue (ie high)
XRO about 13x's earnings (ie very high) and yet XRO is still making loses while FPH v profitable.

I'm guessing there are some financial nerds making more sense of these figures than me and at some stage FPH will come out with more sober (realistic) revenue projections and the market will gain more accurate valuations.

[winner (n)]

Not wishing to defend FPH's sky high P/E however, as we appreciate, P/E is based on historic revenue figs and it seems the market is getting excited by possible projected earnings if FPH obtains a foothold in the anaesthesia market. (ForBar estimating 5 to 7 % EPS upgrades see post #167)

FPH now sitting at valuations of 10 x's revenue (ie high)
XRO about 13x's earnings (ie very high) and yet XRO is still making loses while FPH v profitable.

I'm guessing there are some financial nerds making more sense of these figures than me and at some stage FPH will come out with more sober (realistic) revenue projections and the market will gain more accurate valuations.

Wasn't long ago somebody asked Lewis Gradon would he buy FPH he said something like 'great company but I wouldn't pay that much'

[Left Field]

Wasn't long ago somebody asked Lewis Gradon would he buy FPH he said something like 'great company but I wouldn't pay that much'

Probably right too.....  tho' much depends on what the SP was when he said it.

[Breezy]

Probably right too.....  tho' much depends on what the SP was when he said it.

Probably when it was $24ish, can't see it dropping much before the result, punters will be looking for forward looking goodies at that point.

[Shareguy]

Latest from Craig's

FPH shares have rallied 14% since the guidance upgrade in late March with receding GLP1 fears more broadly. With the company already having pre-announced the FY24 result, the key question when it reports on 29 May will be the guidance for FY25. In a note published overnight Ridgewell and Morrison outline their expectation that FPH will beat consensus expectations for revenue growth for FY25 (CIPe $2.0bn, +15% YoY vs. consensus $1.94bn +12% YoY), driven by new product adoption, easing competitive pressures and a weaker NZ$. Yet the revenue beat will be largely offset by a margin miss (due to freight headwinds) leaving FY25e NPAT of $336m, in line with consensus.

[Waltzing]

P/E for this company is wild ... now most of the country is back at the 10's which would cut the price of this stock back to ?

Its priced like a tech stock...

high growth...

but really its sky high...

 

[Breezy]

P/E for this company is wild ... now most of the country is back at the 10's which would cut the price of this stock back to ?

Its priced like a tech stock...

high growth...

but really its sky high...

 

You had better ask Basil, his last call was $10-$15. If your asking me then about $24 and don't forget that this is a high P/E sector as the norm, its pretty close to a tech stock anyways.

[Waltzing]

we have a pre AI meta base API for processing information from public companies in one of our research companies..

we have it covered..

IF FPH has a problem going forward it will get HIT

It priced to OVER perfection...