CLSA Downgrades Fisher & Paykel Healthcare to Hold, Raises Price Target - Is it Time to Invest?
On Monday, CLSA adjusted its stance on Fisher & Paykel Healthcare (FPH:AU) (OTC: FSPKF), downgrading the stock from Outperform to Hold, but increasing the price target to NZD34.50 from NZD28.60. The move comes after the company's FY25 trading update, showing a 3% rise in its FY25 NPAT (Net Profit After Tax) guidance to NZ$320-370 million, driven by a strong first half of the fiscal year performance.
Fisher & Paykel reported strong year-to-date results "across all products and categories," benefiting from a shift in clinical practices. CLSA sees this as a positive for the company in the long term. However, concerns were raised about the stock's high valuation, currently trading at around 53 times the one-year forward price-to-earnings estimate.
The 20% increase in the price target to NZD34.50 reflects Fisher & Paykel's solid product portfolio, expected to support a multi-year margin recovery. Despite this, the high valuation post-update led to the downgrade in rating.
While the Hold rating indicates a more cautious approach, CLSA suggests looking for opportunities to invest in the company's shares during periods of weakness. The raised price target shows recognition of the company's growth potential and market position.
Analysis: CLSA's downgrade of Fisher & Paykel Healthcare to Hold may signal a more careful approach to investing in the stock. Despite the positive long-term outlook, the high valuation raises concerns. Investors should consider waiting for potential dips in the stock price before making a decision.