Fisher & Paykel Healthcare becomes first NZ company to value $20 billion

Tuesday, 30 June 2020

Covid-19 may have helped seed new markets for Fisher & Paykel Healthcare.

Fisher & Paykel Healthcare has become the first Kiwi company to be worth $20 billion after its shares jumped again on the NZX.

The milestone has been achieved on the back of a 37 per cent increase in its annual profit reported on Monday and an assessment by chief executive Lewis Gradon that its non-invasive Optiflow breathing aids had gained acceptance as the 'preferred front-line treatment for Covid-19'.

The Auckland health technology firm and stock market darling saw its share price rise by 4.7 per cent on Monday and by a further 6.3 per cent to $35.60 on Tuesday, taking the company's market capitalisation to just under $20.5b.

* F&P Healthcare upgrades profit forecast as its devices fight the virus

New Zealand's next-most valuable companies are A2 Milk, Xero – which is listed on the Australian stock exchange – and Meridian Energy.

They have valuations sitting between $12b and $15b.

But Fisher & Paykel Healthcare's price-to-earnings ratio is sitting at a giddying 70:1, which means it will need to grow its profits significantly further in order to justify its current share price.

Australian analyst Morningstar increased its 'fair value estimate' of Fisher & Paykel Healthcare shares by $3 to $22 in response to its latest result, indicating that it believed the stock was heavily over-valued despite its stronger profit and 'long growth trajectory'.

Optiflow, paired with F&P Healthcare's Airvo humidifier, had shown 'strong clinical evidence' in the front-line treatment of Covid-19, as an alternative to ventilators, Morningstar said.

F&P Healthcare's hope is that with its devices now in use in larger numbers in a wider range of markets, they will gain more acceptance as a useful therapy for a broader range of respiratory conditions in hospitals and in the home, creating stronger ongoing demand for its consumables, such as its masks.