Fisher & Paykel: Continued Strong Product Demand and Improving Profitability

Narrow-moat Fisher & Paykel Healthcare has made steady progress in early fiscal 2025. Management reiterated fiscal 2025 revenue guidance of NZD 1.9 to 2.0 billion but increased fiscal 2025 net profit after tax guidance by 3% at the midpoint to NZD 320 to NZD 370 million. We think the market reacted favorably to improved profitability on a constant-currency basis, with the firm continuing to focus on gross margin improvement initiatives. However, the guidance assumes exchange rates on July 31, 2024, will persist. Since then, the US dollar has weakened roughly 4% against the New Zealand dollar, a headwind for reported earnings. We maintain our NZD 25 fair value estimate for narrow-moat Fisher & Paykel Healthcare, or AUD 23 at current exchange rates.