Results: Are Fisher & Paykel Healthcare Corp Ltd (ASX:FPH) shares in the buy zone?

Is the Fisher & Paykel Healthcare Corp Ltd (ASX:FPH) share price in the buy zone after its half year results release?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) share price has edged higher in morning trade following the release of its half year results.

Here's how the company performed in the first half compared to the prior corresponding period:

  • Operating revenue up 12% to NZ$511.3 million.
  • Core Products revenue up 12% to NZ$508.4 million.
  • Gross margin up 80 basis points to 66.8%.
  • Net profit after tax increased 20% to NZ$97.4 million.
  • Half year earnings per share of 17 cents.
  • Outlook: Full year profit growth between 7.8% and 10.4%.

Fisher & Paykel Healthcare Corp's solid half year result was driven by growth across all business units and geographies.

The highlight was arguably its key North America business which delivered a 14% increase in revenue to NZ$240.9 million. This represented almost half of the company's revenue during the six months.

Not far behind in terms of growth was the Asia Pacific business which delivered a 13% increase in revenue to NZ$106.7 million.

Its European business delivered an 8% lift in revenue to NZ$141.1 million and its Other regions business posted a 7% lift in revenue to NZ$22.6 million.

In respect to its product groups, the Hospital segment was its best performer with a 13% increase in revenue. Whereas the Homecare segment grew revenue by a solid 10% during the half.

Managing director and CEO, Lewis Gradon, revealed that its devices and systems used for nasal high flow therapy were behind the growth in its hospital business.

In the Homecare segment, which competes with the likes of ResMed Inc. (ASX: RMD) in the obstructive sleep apnea and respiratory support market, the company experienced robust demand for hardware devices such as its myAirvo and SleepStyle products.

Looking ahead, Mr Gradon has reminded shareholders that the company is cycling a strong period of growth in its Hospital segment in the second half. This was partly the result of a very strong Northern Hemisphere flu season.

So with management conservatively assuming a moderate flu season this time around, it has provided full year revenue guidance of approximately NZ$1.07 billion and net profit after tax in the range of approximately NZ$205 million to NZ$210 million. This represents growth of 9% and between 7.8% and 10.4%.

Should you invest?

Overall, I thought this was a solid result from Fisher & Paykel Healthcare Corp. However, its guidance for the full year is a little underwhelming in my opinion. Especially given that its shares are changing hands at 35x estimated forward earnings.

Based on this, I see more value in ResMed's shares or fellow healthcare star CSL Limited (ASX: CSL) at this point.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

It was another momentous session for ASX shares this Friday.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Share Gainers

Why BHP, Catalyst Metals, Mesoblast, and Pilbara Minerals shares are shooting higher

These shares are ending the week with a bang. But why?

Read more »

Doctor doing a telemedicine using laptop at a medical clinic
Healthcare Shares

The Mesoblast share price just rocketed 38%! Here's why

ASX investors just sent the Mesoblast share price up 38%. But why?

Read more »

A businessman stacks building blocks.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX shares hit a new record high today.

Read more »

A man sees some good news on his phone and gives a little cheer.
Share Gainers

Why Auckland Airport, Australian Ethical, Breville, and Clarity shares are charging higher

These shares are having a better day than most on Thursday. But why?

Read more »

A man sits on a bench atop a mountain with a laptop, making investments with a green ESG mind.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors endured a day to forget this hump day.

Read more »

A young woman holding her phone smiles broadly and looks excited, after receiving good news.
Share Gainers

Why Droneshield, Meteoric Resources, Mount Gibson, and Tyro shares are charging higher

These shares are having a good time on hump day. But why?

Read more »

Ten smiling business people wave to the camera after receiving some winning company news.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX was back in the black this Tuesday.

Read more »