Soaring Coronavirus Incidence Drives Even Higher Demand for Fisher & Paykel’s Respiratory Products

A global surge in coronavirus patients requiring hospitalisation for respiratory treatment continued to drive sales in narrow-moat Fisher & Paykel Healthcare’s hospital hardware and consumables in third-quarter fiscal 2021. Fisher now expects to better its fiscal 2021 guidance of NZD 1.72 billion revenue NPAT of NZD 400 million-415 million it provided in November 2020. While the original guidance implied weaker second-half earnings and demand to begin normalising, sales have accelerated. Constant currency group revenue for the first nine months of fiscal 2021 has risen 73% on the previous corresponding period, compared with 61% growth in the first half. Largely driven by the top-line near term, we increase our fair value estimate by 5% to NZD 23.00 and update the Australian dollar equivalent to AUD 21.40 to reflect the latest NZD/AUD exchange rate of 1.08 from 1.05 prior. Our forecast fiscal 2021 revenue and NPAT increase by 24% to NZD 2.14 billion and NZD 516 million, respectively, as we think hospitalisation rates will remain elevated until the end of fiscal 2021.