Date of Data Capture: 1/6/2017
Name: FISHER & PAYKEL HEALTHCARE (FPH)
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
Medium-term: Positive Neutral
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.