F&P Healthcare falls for second day

New Zealand's sharemarket dipped on Thursday as Fisher & Paykel Healthcare suffered another day of decline after providing earnings guidance yesterday morning.

Thursday, March 24th 2022, 7:17PM

by BusinessDesk

The S&P/NZX 50 Index fell 43 points, or 0.4%, to 12,017.61. Turnover was $151 million.

On Wednesday morning, F&P Healthcare told the market it expected 2022 revenue to be just under $1.7 billion – a downgrade from the $1.75b Reuters consensus.

Despite investors already expecting lower earnings, because hospitalisation rates have fallen thanks to vaccines and the milder omicron variant, they still were taken by surprise and sold the stock aggressively.

It fell almost 8% yesterday and another 4.5% today, bringing it to $24.25 or more than 30% below its 12-month high of $36.50.

Forsyth Barr’s Matt Montgomerie said it was the first genuine insight into what the post-covid era would look like for the company and it was “not a good start”.

Montgomerie said 2023 was likely to be “the new base” for investors to use as a comparison but it could be a difficult one with expenses elevated and a revenue rebound some way off.

Analysts broadly trimmed their valuations and target prices for F&P – now ranging between $24 and $30 – but held onto a positive view of the stock in the long term.

Jarden upgraded the stock from ‘neutral’ to ‘overweight’ now that the share price had corrected due to the inevitable fall in revenue that comes with fewer hospitalisations.

Analyst Adrian Allbon said he was still confident in the stock’s longer-term growth as it had placed lots of hardware in hospitals during the pandemic.

The company will release its full year results and more detail on May 25.

Besides Fisher & Paykel Healthcare, the local share market was broadly weaker with high risk or unprofitable companies leading the fall.

Pacific Edge dropped another 2.2% to 91 cents, Air New Zealand dropped 2.1% to $1.385, and Pushpay Holdings was down 1.7% at $1.13.

Shares in Serko, on the other hand, were up 1.1% to $4.55 after Macquarie trimmed its target price, but only by 1%. The equity analysts still value the stock at $6.11 and give it a 12-month target of $8.95.

Vista Group International was the biggest gainer on the index, with a 2.8% climb to $1.85.

KMD Brands was up 2.3% at $1.36 after it delivered a result this week in line with market expectations, causing analysts to reiterate their view on the company.

“Uninhibited by future lockdowns, the company is upbeat about a “wave” of new Kathmandu stores, along with online expansion into Europe and Canada,” said Devon’s head of retail, Greg Smith.

The Warehouse Group was up 0.6% at $3.21, having slightly outperformed market expectations but warning inflation pressures would be a challenge.

The NZ dollar continues to march toward 70 US cents, trading at 69.69 US cents at 3pm in Wellington, up from 69.61 cents yesterday.

“Since the Ukraine war started, commodities have accelerated higher, boosting commodity currencies such as the NZD,” said

Westpac’s Imre Speizer.

“Commodity prices should remain a major source of support this year, and the NZD has potential to reach 70 cents during the month ahead, and 71 cents by June,” he said.

Tags: Market Close