News & Analysis

Year to Date: ASX Best Performer

March 20, 2020

By Deepta Bolaky
 @DeeptaGOMarkets

It may be difficult to remain optimistic in such plunging markets. Global equities are in bear market territory and investors are moving away from riskier assets. Amid the mayhem, there might still be some buying opportunities if investors are selective about certain stocks.

We are facing a global pandemic that is slowly forcing major countries into lockdown and halting global activity. Investors are therefore tapping into sectors that offer great bargains or where they see long-term growth opportunities.

The health care sector seems to be on investors’ watchlist. It should be highlighted not all health care stocks are performing the same way.

Fisher & Paykel Healthcare Corp Ltd

In the Australian share market, Fisher & Paykel Healthcare Corp Ltd is standing out. The company is a manufacturer, designer and marketer of products and systems for use in respiratory care, acute care, and the treatment of obstructive sleep apnea.

Fisher & Paykel Healthcare’s share price rose significantly since the widespread of the COVID-19. With a rise of around 25% since the beginning of the year and 74% in the last 6 months, the company is among the best-performing stocks of the S&P/ASX200.


Source: Bloomberg Terminal

Back-to-back upgrades

While most companies are downgrading forecasts in this bear market environment, the company has issued two upgrades since the beginning of the year.

Vitera, a new full face mask used in the treatment of obstructive sleep apnoea has outperformed in the early stages. The company also received clearance to sell the mask in the US sooner than expected which contributed meaningfully in driving its share price to new record highs.

The company also delivered a strong financial performance for the six months to 30 September 2019:

  • Net profit after tax was up by 24% at $121.2million
  • Operation revenue rose by 12% at $570.9 million

The COVID-19 outbreak has substantially increased demand for certain products, which has enabled the company to upgrade its revenue and earnings guidance for the financial year ended 31 March 2020 a couple of times since January.

Taking into consideration exchange rate revisions, the company is now expecting:

  • Full-year operating revenue to be approximately $1.24 billion instead of $1.19 billion in November’s guidance.
  • Net profit after tax to be within the range of approximately $275 million to $280 million instead of approximately$255 million to $265 million back in November.

On the supply side, the fact that the company does not have a manufacturing facility in China, they are not expecting major supply disruptions. It has actually ramped up production and increased shipments to cope with the increased in demand.

Overall, the company is also making progress with other major initiatives and is establishing a presence in more countries while undertaking numerous other studies.

The continuous growth of the company in the near and medium-term does, therefore, look promising.

By Deepta Bolaky
 @DeeptaGOMarkets

Disclaimer: Articles and videos from GO Markets analysts are based on their independent analysis. Views expressed are of their own and of a ‘general’ nature. Advice (if any) are not based on the reader’s personal objectives, financial situation or needs.  Readers should, therefore, consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice.

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