Can rising COVID-19 cases push these stocks further north? (RMD, FPH, ANN)

  • Aug 02, 2020 AEST
  • Team Kalkine
Can rising COVID-19 cases push these stocks further north? (RMD, FPH, ANN)

Summary

  • Australian Government’s response towards containing the Virus crisis was deemed successful worldwide. 
  • Amid the pandemic, healthcare companies supporting the healthcare regime through equipment and software solutions have received considerable investor attention.
  • ResMed Inc experienced robust sales across its mask and device product portfolios, including increased demand for its ventilators due to COVID-19.
  • Fisher & Paykel Healthcare experienced growth in the use of its OptiflowTM nasal high flow therapy and demand for products to treat COVID-19 patients. 
  • Ansell experienced robust demand for its AlphaTec® hand and body protection products to be safe from infective agents.

The global health pandemic COVID-19 in Australia was first confirmed during late January 2020. The response of Government towards containing the virus was deemed amongst the most successful effort globally. However, Australia is currently experiencing fear of the second wave of Coronavirus after three months of successful control of the pandemic. As per Australian Government’s Department of Health, the total confirmed cases in Australia reached 16,905 with 651 daily reported cases on 31 July 2020,. 

On that backdrop, we will look at quarterly updates of three healthcare stocks that have gained traction amid rising cases of COVID-19.

ResMed Inc

ResMed Inc (ASX: RMD) provides medical equipment and cloud-based software for managing respiratory diseases. Recently, the company released its operational and financial results for the quarter ended March 2020 (Q3 FY20) and highlighted the following:

  • The company reported revenue of US$769.5 million, reflecting a rise of 16% over previous corresponding period and witnessed a growth of 17% on a constant currency basis.
  • Strong sales were recorded throughout its mask, and device product portfolios, including increased demand for its ventilators due to COVID-19 with revenue in the US, Canada, and Latin America segment (excluding Software as a Service) went up by 12%. Europe, Asia, and other markets also experienced a revenue surge of 27% when combined as a segment.
  • As a result of continued growth in Brightree and MatrixCare service offerings, revenue from Software as a Service rose by 12%.  
  • Net income for the period moved up by 55%, and diluted earnings per share grew by 53%. 
  • The company reported cash flow from operations at US$239.7 million and net income of US$163.1 million. During the quarter, the company paid US$56.4 million in the form of dividends.

Do Read: Benefits to Major Health Player from MBS-funded Telehealth Services.

The company has scheduled its release of financial and operational results for Q4 FY20 on 5 August 2020. 

Going forward, the company is optimistic about its ability to navigate through the challenging clinical and economic environment to deliver for all its stakeholders.

At the close of the session, the stock of RMD stood at A$28.280 per share with a fall of 0.772% as on 31 July 2020. The market capitalization of the RMD stands at A$41.29 billion. The stock of RMD has generated returns of 21.79% and 17.24% during the last three months and six months, respectively.

Fisher & Paykel Healthcare Corporation Limited

Fisher & Paykel Healthcare Corporation Limited (ASX: FPH) is engaged in the designing, manufacturing and marketing of products and systems for use in respiratory care, acute care, surgery and the treatment of obstructive sleep apnea. 

Operating Revenue Growth in FY20

  • For the year ended 31 March 2020, the company reported operating revenue of NZ$1.26 billion, a rise of 18% backed by growth in the use of its OptiflowTM nasal high flow therapy, and demand for products to treat COVID-19 patients.
  • Net profit after tax for the period stood at NZ$287.3 million, reflecting a rise of 37% over the previous year, or 30% in constant currency. 
  • During FY20, FPH rolled out F&P ViteraTM OSA full face mask into the US market and introduced the new F&P EvoraTM compact nasal mask in Australasia, Europe, and Canada. 
  • Gross margin for FY20 decreased by 73 bps to 66.1%, mainly due to additional air freight costs required to acquire an increased supply of raw materials and expedite delivering finished goods to customers for patient use towards the end of FY20.
  • The priority of the company is to invest in the business for supporting long term sustainable growth. FPH has maintained a target debt-to-debt-plus-equity ratio in the range of +5% to -5%.

For FY21, the company expects to report operating revenue of ~ NZ$1.48 billion and net profit after tax in the range of NZ$325 million to NZ$340 million.

At the close of the session, the stock of FPH stood at A$33.070 per share with a rise of 0.364% as on 31 July 2020. The market capitalization of the FPH stands at A$18.94 billion. The stock of FPH has generated returns of 30.24% and 50.53% during the last three months and six months, respectively.

 

Ansell Limited

Ansell Limited (ASX: ANN) provides premium health and safety protection solutions which enhance human well-being. Recently, the company announced that planned succession of CEO Magnus Nicolin had been deferred by six months from July 2021 to December 2021.

In a recent business update, the company announced that it is experiencing robust demand for AlphaTec® hand and body protection products which are tested and certified to recognized standards for protection from infective agents. Moreover, the company witnessed high demand for most of its Microflex® & TouchNTuff® single-use examination gloves and for Gammex® & Encore® surgical gloves. 

The company possesses a strong balance sheet with cash and committed undrawn bank facilities of around US$515 million as of 29 February 2020. In addition, ANN has no significant debt maturities in the upcoming 12 months. The company continues to deliver positive operating cash flow. 

For FY20, the company is expecting EPS in the range of US112¢ to US122¢ considering future pipeline of orders. The company will release its FY20 results on 25 August 2020.

At the close of the session, the stock of ANN stood at A$38.450 per share with a fall of 1.863% as on 31 July 2020. The market capitalization of the ANN stands at A$5.04 billion. The stock of ANN has generated returns of 37.23% and 21.79% during the last three months and six months, respectively.

 


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