"A cracker'' full-year result last week from Fisher & Paykel Healthcare (FPH) has prompted a stock upgrade, on expectations of an even better year ahead.
Craigs Investment Partners broker Peter McIntyre said FPH had delivered "another cracking result'' last week, with revenue up 21% and after-tax profit up 27% on a year ago.
Revenue for the year ended March was up 21.3% to $815.5 million and the reported profit rose 27% to $143.4 million.
Mr McIntyre said it was the fourth consecutive year FPH had delivered strong double-digit constant currency revenue and after-tax profit growth.
"The result is even better than it looks at first glance, given the anticipated disruption caused by a move to direct distribution in the US, and the unanticipated headwind of a weak and late northern hemisphere flu season,'' he said.
Craigs had upgraded the share-price 12-month target 2.5% to $12.20. Estimated sales increased 1.6% from $923 million to $937 million, and estimated after-tax profit increased 0.7% to $173.8 million.
FPH's products span both hospital and homecare markets, including acute respiratory systems and products for treating obstructive sleep apnoea.
FPH's full-year 2017 guidance was for after-tax profit in a range of $165 million to $170 million.
Mr McIntyre said that was below analysts' consensus of $171 million and Craigs' $173 million, which appeared "conservative'', he said.
"We highlight that FPH has a consistent track record of upgrading guidance provided in May at its annual shareholders meeting in August,'' he said.
He also noted FPH would benefit from a year-on-year currency tailwind of about $9 million towards its earnings before interest and tax.
Some key risks it faced in the year ahead included strengthening of the New Zealand dollar, reimbursement and increasing competition, Mr McIntyre said.
