Scoop has an Ethical Paywall
Work smarter with a Pro licence Learn More

Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Macquarie lifts F&P Healthcare price target by 7.3%

Tuesday 23 May 2017 12:32 PM

Macquarie lifts F&P Healthcare price target by 7.3%

By Rebecca Howard

May 23 (BusinessDesk) - Macquarie Group lifted its 12-month target price on Fisher & Paykel Healthcare by 7.3 percent and kept its 'outperform' rating after the company's full-year revenue growth beat expectations and as a weaker New Zealand dollar weighs in the exporter's favour.

The Australian investment house has a 12-month target price of $11, up from $10.25. The stock recently unchanged at $10.10.

F&P Healthcare yesterday posted an 18 percent gain in full-year profit, meeting guidance with record annual sales, and said revenue in the current year may reach $1 billion. Profit rose to a record $169 million in the 12 months ended March 31, from $143 million a year earlier, while operating revenue climbed 10 percent to $894 million.

"Revenue growth was stronger than expected, driven by a stronger-than-expected result from both home and hospital and higher-than-expected hedging gains," Macquarie said in its report.

However, it noted litigation costs over a patent dispute with ResMed were significantly higher than anticipated. F&P Healthcare competes with Resmed and Respironics and is currently engaged in a patent dispute with Resmed which generated $20.7 million in legal costs in the 2017 year. The company filed patent infringement proceedings against Resmed, which countered with its own suit claim that F&P Healthcare's OSA (obstructive sleep apnea) products infringed its patents.

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

According to Macquarie, F&P Healthcare has indicated selling, general and administrative (SG&A) spending - which includes litigation costs - will outpace sales growth by 4 percent in the 2018 financial year.

Macquarie said the stronger starting point and the lower New Zealand dollar assumptions - particularly against the euro and the British pound - supported higher revenue forecasts. However, increased litigation costs in the short to the medium term offset those gains, which led to a downward revision in earnings.

"We do not expect these costs to feature to the same degree in the longer term, and as a result have longer-term upgrades," Macquarie said.

The firm expects F&P Healthcare to generate revenue of $1.03 billion in the 2018 financial year, $1.14 billion in FY19 and $1.26 billion in FY20.

(BusinessDesk)

ends

© Scoop Media

Advertisement - scroll to continue reading
 
 
 
Business Headlines | Sci-Tech Headlines

 
GenPro: General Practices Begin Issuing Clause 14 Notices

GenPro has been copied into a rising number of Clause 14 notices issued since the NZNO lodged its Primary Practice Pay Equity Claim against General Practice employers in December 2023.More

SPADA: Screen Industry Unites For Streaming Platform Regulation & Intellectual Property Protections

In an unprecedented international collaboration, representatives of screen producing organisations from around the world have released a joint statement.More

 
 
 
 
 
 
 
 
 
 
 
 

Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.