F&P Healthcare tipped to beat its own forecast with record result

Fisher & Paykel Healthcare could beat its own guidance for a recordbreaking annual profit when its fullyear result is revealed on Friday, a broker says.

The Auckland-based medical technology company has flagged a profit in the range of $105 million to $110 million for the 12 months to March 31. That would be an up to 13 per cent increase on the $97.1 million record profit it reported last year.

But Craigs Investment Partners, which has a “buy” recommendation on the stock, is forecasting a $111 million profit.

“We’re happy to be ahead of company guidance because the company has a history of playing it safe and being conservative,” said head of private wealth research Mark Lister. “We wouldn’t be at all surprised if they pushed through the top-end of their guidance or, if not, that they’re very close to the top.”

F&P Healthcare has delivered a string of profit upgrades over the past couple of years on the back of new product launches and increased manufacturing at a lower-cost factory in Mexico.

Its shares, which have more than tripled in value since 2012, closed down 2c at $6.37 last night.

Stuart Williams, head of equities at Nikko Asset Management, said the recent share price performance suggested market expectations were for a result within the range of company guidance.

“It could be a bit above that range but they’ve had opportunities to update the market,” said Williams, whose firm has an overweight holding in F&P Healthcare. “The company is going exceedingly well.”

The New Zealand dollar’s steady fall against the greenback since the middle of last year is also positive for the exporter, which derives roughly 50 per cent of operating revenue in US dollars.

Hedging cover has been limiting the benefits of that currency weakness, but that cover is set to reduce over the next three financial years. Seventy-five per cent of the firm’s expected US dollar exposure is hedged at US75c this financial year, falling to 35 per cent at US73c in 2017 and 1 per cent at US66c in the 2018 year.