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On Monday, UBS analysts revised their stance on Fisher & Paykel Healthcare (FPH:NZ) (OTC:FSPKF), downgrading the stock from Buy to Neutral and adjusting the price target to NZD39.00, up from the previous NZD37.50. The revision reflects the analysts’ view that the current share price now adequately captures the company’s prospects, including the anticipated benefits from reduced tariff impacts and expected robust earnings per share (EPS) growth.
The UBS team highlighted Fisher & Paykel’s potential for strong EPS growth, projecting a compound annual growth rate (CAGR) of 17% starting from the fiscal year 2026. This optimism is based on the adoption of high flow therapy (HFT), gains in the obstructive sleep apnea (OSA) mask market, and prospects for margin expansion. Despite the downgrade, analysts noted that Fisher & Paykel should maintain a significant price-to-earnings (P/E) premium compared to other large-cap healthcare peers in Australia and New Zealand, owing to its superior EPS growth trajectory.
The analysts also pointed out possible drivers for future share price increases. These could stem from a forward roll onto higher EPS figures or from the long-term opportunities in the home HFT market. According to UBS, the latter could potentially add an additional $3-5 per share to the company’s valuation.
The UBS analysts believe that the recent re-rating of Fisher & Paykel’s shares has brought the stock to a fair valuation, taking into account the company’s growth prospects and market position. They consider the stock’s upside potential to be most likely tied to the company’s future earnings performance or the realization of its home HFT market potential.
In summary, the UBS team’s updated rating and price target for Fisher & Paykel reflect a balanced view of the company’s growth prospects against its current market valuation. The analysts underscore the company’s strengths in HFT adoption and market share gains in the OSA mask segment, which are expected to drive significant EPS growth in the coming years.
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