Growth Focus: Fisher & Paykel Healthcare Corp Ltd (FPH)

by Patrick Taylor

Date of Data Capture: 1/6/2017


Classification: Healthcare Equipment & Supplies

Current Price: $10.25

Market Capitalisation: $5.76B

Forecast EBITDA Growth: 15.75%

Estimated Gross Yield: 1.9%

Consensus Price Target: $10.47

# Covering Analysts: 6

Discount at Current Price: 2.2%

Price Target Trend: Increasing Flat

Signal Timeframe: Monthly-Weekly-Daily

Trend Bias: Up Flat ; Long-Medium

Short-term: Positive
Medium-term: Positive Neutral
Long-term: Positive

Recommendation: Buy

Focus: Capital Growth

Set up Notes:
• FPH is emerging from year-long 20% consolidation and is pushing to new all-time highs again right now and has strong performance and forecasting to back it up.
• Their recovery within the first half of 2017 was fuelled by continued good news within a strong sector with favourable demographic outlook and we think there should be more to come.
• Technical momentum has re-established across key timeframes as prices push past historical resistance at $10.20 and we are looking to follow a successful bounce of this newly established $10 support, with more layered down to $9.50 and $9.00 if needed.

Growth Focus: Fisher & Paykel Healthcare Corp. Ltd.

Our primary focus here is capital gain, we will select our stocks from the ASX top 500 All Ordinaries Index.

After trawling the market for good ideas, we think we have a good angle on an interesting growth stock here and we suggest you cast your eyes on Fisher & Paykel Healthcare Corp Ltd. If you can’t catch a stock at the beginning of its recovery you may as well jump on board as it breaks out of consolidation and into new highs and blue skies. That is not to say it is psychologically easy to buy shares at all-time highs, but with their previous uptrend delivering a rally that gained over 500% since listing in late 2012, we know this stock can really move when running.

Founded in 1934 and headquartered in Auckland, New Zealand, FPH manufactures respiratory equipment and consumable medical products aimed at treating breathing and sleep disorders within their Respiratory and Acute Care and Obstructive Sleep Apnea business arms. They have had considerable success over the last few years, based on the simple prescription of driving down costs and expanding existing business footprint while entering new markets around the world.

They are fundamentally strong with excellent recent reporting showing continued growth in revenue and margins, with profits up 18%, along with a dividend increase of 17%. Some extra risk/reward exists with the ongoing litigation with Resmed Ltd (RMD) which may result in a significant price shock that will be either positive or negative – but there is no way to predict this outcome so we won’t bother. Looking forward, we do know that organic growth of the core business is already very good but is set to improve further with manufacturing to increasingly be done in their new facility in Mexico to further reduce costs and increase profit margins. Another bonus is their active approach to research and development with healthy funding, carrying almost no debt and plenty of exciting forward business prospects.

Technically they are very robust, with a beautiful linear uptrend that lasted from late 2012 to mid-2016 which saw pricing increase fivefold. This ended in August of 2016 around $10.00, from where they began their 10 month consolidation with an initial 25% collapse to $7.70 by November that year. The rally of the last 6 months has seen them push back to test their old structural resistance target and previous peak-price high at $10.00 last week. Their recovery has been sharp and built on the strong foundation of good news and beaten expectations, with momentum lining up well across key timeframes here we think their amazing rally of the last few years didn’t expire but rather just paused for breath.

With strong historical performance backed by excellent forecasts for continued growth, coupled with an exciting technical structure with a high potential set up, we are happy to hook up with FPH, a company in hale and hearty health.


This report was produced by Taylor Securities Pty Ltd, which is a Corporate Authorised Representative (Number 414063) of Bespoke Portfolio Pty Ltd (AFSL 341991). Taylor Securities and Patrick Taylor (Representative number 414064) have made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, Taylor Securities and Patrick Taylor does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities or financial products. The securities or financial products recommended by Taylor Securities and Patrick Taylor carry no guarantee with respect to return of capital or the market value of those securities or financial products. There are general risks associated with any investment in securities or financial products. Investors should be aware that these risks might result in loss of income and capital invested. Neither Taylor Securities and Patrick Taylor nor any of its associates guarantees the repayment of capital. WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.

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