New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

Fisher & Paykel Healthcare Corp / Equity Bottom-Up

<ul><li>With guidance provided near year-end, we see little scope for material underlying surprises and walk into F&amp;P Healthcare's (FPH) FY24 result on Wednesday, 29 May, with confidence it will guide to strong FY25 NPAT growth (consensus currently forecasts ~+27%).</li><li>That said, FPH's share price is up ~+22% year-to-date despite minimal FY25 and beyond consensus earnings upgrades since the 1H24 result in November.</li><li>FPH is a high-quality business with a strong growth outlook, helped by a quickly growing anaesthesia contribution, but at ~49x 12 month forward PE, there is limited room for error relative to consensus' near-term earnings expectations. </li></ul>

With guidance provided near year-end, we see little scope for material underlying surprises and walk into F&amp;P Healthcare's (FPH) FY24 result on Wednesday, 29 May, with confidence it will guide to strong FY25 NPAT growth (consensus currently forecasts ~+27%).That said, FPH's share price is up ~+22% year-to-date despite minimal FY25 and beyond consensus earnings upgrades since the 1H24 result in November.FPH is a high-quality business with a strong growth outlook, helped by a quickly growing anaesthesia contribution, but at ~49x 12 month forward PE, there is limited room for error relative to consensus' near-term earnings expectations. 

F&P Healthcare - FY24 Preview — High Expectations

<ul><li>We upgrade our rating on F&amp;P Healthcare (FPH) to NEUTRAL from UNDERPERFORM.</li><li>Our analysis suggests a large long-term opportunity in the anaesthesia market.</li><li>This reflects: (1) strong industry feedback, (2) large market size, and (3) current use case/body of clinical research, underpinning a solid market penetration ability (which we expect to grow through time). </li></ul>

We upgrade our rating on F&amp;P Healthcare (FPH) to NEUTRAL from UNDERPERFORM.Our analysis suggests a large long-term opportunity in the anaesthesia market.This reflects: (1) strong industry feedback, (2) large market size, and (3) current use case/body of clinical research, underpinning a solid market penetration ability (which we expect to grow through time). 

F&P Healthcare - The Next Big Thing; Upgrade to NEUTRAL

<ul><li>F&amp;P Healthcare's (FPH) revised FY24 underlying NPAT guidance range is +3% ahead of prior consensus, reflecting improving revenue trends.</li><li>FPH referenced stronger hospital consumables revenue, and importantly; (1) homecare revenue is tracking ahead of our prior expectations, and (2) underlying new apps trends remain constructive (helped by solid anaesthesia growth).</li><li>We walk away with increased comfort in the earnings outlook and view reaching FY25 consensus expectations in light of the implied homecare and new apps consumables revenue run rates as more achievable. </li></ul>

F&amp;P Healthcare's (FPH) revised FY24 underlying NPAT guidance range is +3% ahead of prior consensus, reflecting improving revenue trends.FPH referenced stronger hospital consumables revenue, and importantly; (1) homecare revenue is tracking ahead of our prior expectations, and (2) underlying new apps trends remain constructive (helped by solid anaesthesia growth).We walk away with increased comfort in the earnings outlook and view reaching FY25 consensus expectations in light of the implied homecare and new apps consumables revenue run rates as more achievable. 

<ul><li>F&amp;P Healthcare's (FPH) 2H24 revenue guidance and outlook commentary is for hospital consumables seasonality to be consistent with pre-COVID.</li><li>In light of recent respiratory patient data, along with port data, we see a low likelihood at this stage that FPH will materially exceed current consensus revenue expectations (noting that consensus revenue is already ~+1% ahead of guidance).</li><li>We retain our UNDERPERFORM rating, reflecting elevated valuation and concerns around the new apps consumables revenue growth required over the long term to justify the current share price.</li></ul>

F&amp;P Healthcare's (FPH) 2H24 revenue guidance and outlook commentary is for hospital consumables seasonality to be consistent with pre-COVID.In light of recent respiratory patient data, along with port data, we see a low likelihood at this stage that FPH will materially exceed current consensus revenue expectations (noting that consensus revenue is already ~+1% ahead of guidance).We retain our UNDERPERFORM rating, reflecting elevated valuation and concerns around the new apps consumables revenue growth required over the long term to justify the current share price.

Thematic (Sector/Industry)

<ul><li>For the first time in three years we are moving our WACC assumptions down.</li><li>This is driven by a modestly lower (-25 bps) interpolated 10-year interest rate assumption; our proxy for the risk free rate.</li><li>We also incorporate our C&amp;ESG ratings into our WACC assumptions. We do this on an overall neutral basis, with a scale of -25 bps to +25 bps added to the cost of equity. </li></ul>

For the first time in three years we are moving our WACC assumptions down.This is driven by a modestly lower (-25 bps) interpolated 10-year interest rate assumption; our proxy for the risk free rate.We also incorporate our C&amp;ESG ratings into our WACC assumptions. We do this on an overall neutral basis, with a scale of -25 bps to +25 bps added to the cost of equity. 

Equity Strategy - WACC Review; a Lower Rfr and Adding C&ESG

New Zealand

Fisher & Paykel Healthcare Corporation Limited designs, manufactures and markets heated humidification products and systems for use in respiratory care and the treatment of sleep apnea.  The Company also offers patient warming and neonatal care products, including warming products and infant resuscitators.

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Fisher & Paykel Healthcare Cor (FPH AU)

F&P Healthcare - FY24 Preview — High Expectations

FPH is a high-quality business with a strong growth outlook, helped by a quickly growing anaesthesia contribution, but at ~49x 12 month forward PE

Forsyth Barr

F&P Healthcare - The Next Big Thing; Upgrade to NEUTRAL

We upgrade our rating on F&P Healthcare (FPH) to NEUTRAL from UNDERPERFORM. Our analysis suggests a large long-term opportunity in the anaesthesia...

Forsyth Barr

F&P Healthcare - Improving Health

F&P Healthcare's (FPH) revised FY24 underlying NPAT guidance range is +3% ahead of prior consensus, reflecting improving revenue trends.

Forsyth Barr

F&P Healthcare - Checking the Wards

F&P Healthcare's (FPH) 2H24 revenue guidance and outlook commentary is for hospital consumables seasonality to be consistent with...

Forsyth Barr

Equity Strategy - WACC Review; a Lower Rfr and Adding C&ESG

For the first time in three years we are moving our WACC assumptions down. This is driven by a modestly lower (-25 bps) interpolated 10-year...

Forsyth Barr

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