Is this stock the new CSL - Fisher & Paykel Healthcare?

  • Feb 24, 2020 AEDT
  • Team Kalkine
Is this stock the new CSL - Fisher & Paykel Healthcare?

Due to the recent coronavirus outbreak and bushfire impact on Australia, the health care sector seems to have garnered attention in terms of developing new technology and performing clinical trials across the world.

CSL is one of the topmost health care entity and ASX listed player that has outperformed and has a well-planned drug pipeline in the upcoming years. On coronavirus outbreak, CSL mentioned that it does not focus on the core area of the influenza virus; however, the company has partnered with the vaccine development program of the Queensland University of COVID-19.

Moreover, CSL revealed that it would provide its technical expertise and a donation of Seqirus proprietary adjuvant technology, MF59®, to the pre-clinical development plan of the University of Queensland.

Likewise, another health care sector player Fisher and Paykel is performing good and when countless companies including some from health care space have reported a negative impact on their business due to coronavirus. Moreover, Fisher and Paykel health care has come across better-than-predictable sales in its hospital product division after a rise in demand from China due to coronavirus outbreak.

In this article, we are discussing the achievements of Fisher and Paykel and how the company is coming to be one of the best performing health care sector players.

Moving ahead, let us throw some light on the innovation and future growth of one of the biggest biotech company CSL in brief-

CSL Limited (ASX: CSL)

A leader in biotherapeutic space CSL Limited (ASX: CSL) is engaged in the development, production and marketing of pharma and diagnostic goods, human plasma fractions and cell culture media. CSL is participates in the development, commercialisation and supply of innovative biotherapies and influenza vaccines.

The company operates two businesses- CSL Behring and Seqirus and employs 25,000 people. CSL offers life-saving medicines to more than 70 countries. The unique combination of R&D focus, operational excellence and commercial strength enables the company for developing and delivering innovations so that the patients can improve their lives and live to the fullest.

Innovation for Future Growth-

Stock Performance-

CSL stock was trading at $ 326.430, down by 2.964%, (at AEDT 2:58 PM) on 24 February 2020. With a market cap of approximately $ 152.69 billion, the 52-weeks high and low price of the stock was noted at $ 184.000 and $ 342.750, respectively. The stock has delivered a positive return of approximately 22.31% on year to date basis and 42.97% in the previous six months.

Let us now discuss F&P healthcare and its achievements that could be responsible for its growth in the near future-

Fisher & Paykel Healthcare Corporation Limited (ASX:FPH)

An ASX listed health care player Fisher & Paykel Healthcare Corporation Limited (ASX:FPH) is engaged in providing products used in the respiratory care and is a leader in the marketing, manufacturing and designing of these systems and products.

The products offered by FPH are utilised for treating OSA or obstructive sleep apnea and for offering acute and respiratory care.

FPH operates in two groups; Hospital product group and Homecare product group

  • Hospital product group comprises of humidification products used in respiratory, acute and surgical care
  • Homecare product group includes products used in the respiratory support and for the treatment of obstructive sleep apnea (OSA) in the home

Revenue and earnings guidance-

On 21 February 2020, F&P revealed that the company had updated its revenue and earnings guidance for FY2020 (ended 31 March 2020).

As per the previous guidance provided in November, based on an NZ:US exchange rate of 64 cents, was for operating revenue to be nearly $1.19 billion and NPAT to be ~$255 million to $265 million.

According to the updated guidance assuming an NZ:US exchange rate of ~64 cents for the remaining financial year, FPH anticipates operating revenue for a complete year to be nearly $1.2 billion and NPAT to be in the range of almost $260 million to $270 million.

Amidst the coronavirus outbreak, the profit for Fisher & Paykel healthcare predicted to increase. FPH mentioned that sales in its Homecare product group merged with constant solid growth in Hospital product group were better than the anticipations. This also includes an increase in the demand from China due to the Coronavirus outbreak.

Evora™ compact nasal mask-

On 3 February 2020, Fisher & Paykel updated the market on introducing its new compact nasal mask known as F&P Evora™ for the treating OSA or obstructive sleep apnea. At first, this nasal mask would be offered to the patients in Australian and New Zealand regions from the month of February, and post that in Europe and Canadian regions as well.

Appointment of new future director-

According to one ASX announcement dated on 5 February 2020, F&P revealed that the company had selected Toni Moyes to take part in the Future Directors programme.

Currently, she is working as COO at Montoux and has over fourteen years of experience in management, governance, leadership, legal and operational roles.

Ms Moyes will bring a new perspective to the company, and her executive experience in technology companies will be valuable for Fisher & Paykel as the company continue to focus on innovation and growth.

Financials for H1 2020- (ended 30 September 2019)

  • Net profit after tax for the first half of 2020 was approximately $121.2 million, up by 24% as compared to the previous corresponding period (pcp)
  • The operating revenue was $570.9 million, up by 12% on the previous corresponding period.
  • The group operating revenue from hospital product increased by 19% to a record $353.6 million.
  • In the homecare product group, the operating revenue soared 2% to NZ$214.7 million.

Outlook for the remainder of FY2020-

  • For the second half of the financial year 2020, the company expect consistent underlying trends in its hospital product group. Moreover, for the remaining half, FPH expects constant currency hospital revenue growth like the H2 FY19.
  • Fisher & Paykel continues to anticipate complete year operating revenue for the financial year 2020 at current exchange rates to be around $1.19 billion and net profit after tax (NPAT) to be nearly in the range of $255-$265 million.
  • F&P expects that during the financial year, the healthcare products of the company would be used by over 15 million patients in 120 countries.

Stock Performance-

On 24 February 2020, FPH was trading at a price of $24.905, moving up by 1.199%, (at AEDT 3:43 PM). With a market cap of approximately $ 14.14 billion, the 52-weeks high and low price of the stock was noted at $25.290 and $12.720, respectively. The stock has delivered a positive return of approximately 17.36% on year to date basis and 64.95% in the previous six months.

Fisher & Paykel Healthcare celebrated its 50th anniversary in 2019, and throughout its history, the company has focused on continuous improvement and innovation. As a result, its products are now considered as leaders in their respective fields.

With key milestones achieved in 2019, Fisher & Paykel Healthcare has a strong foothold in the health care sector in Australia, and by looking at its outlook, the continuous growth of the company could be assumed in the upcoming years.

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