FPH - Fisher Paykel Healthcare.

[winner69]

Question: ‘Lewis, why has the FPH share price almost halved over the last 18 months?’

Lewis: ‘Ask those who buy and sell our shares. We have no control over the price of our shares, the market does that’

[Arbroath]

I agree in principle and there are of course, rules around companies pumping their own stock, but we are looking at NZ's biggest company heading towards halving in value in less than two years (SP was $37 in Aug 20) and in a period of record profits and increased demand for their products. Not worthy of comment? Guidance and results are one thing, and whilst I recognise the market is fickle, in this case I think shareholders (the owners of the company) deserve at least some commentary on the drastic decline in their wealth.

Nothing personal but I don't get what you and many others can't understand...

1. The share price got overhyped in 2020
2. Profits were magnified by covid above the longer term sustainable growth rate
3. Many "investors" failed to understand point 2 above and overpaid
4. interest rates are now rising and high PE growth stocks like FPH get hurt by that
5. points 1-4 explain the share price the last 6-12 months
6. FPH is still a great company despite the share price performance the past 6-12 months.

[Beagle]

I don't follow this one mate but its important to understand that I am not talking about interest rates as it affects consumers, rather the 10 year Govt stock rate that affects the DCF valuation of the company. As long term interest rates increase the current value of future growth gets marked back as investors demand a better price for a company now to compensate for higher rates and future growth is generally worth less in today's dollar terms.
https://www.marketscreener.com/quote...30/financials/
I think its well worth noting that last years result of 90 cps is regarded as the peak and the average analyst is projecting just 71, 67 and 78 cents respectively in the next 3 years.
At $28 this puts FPH on a forward prospective PE of 39 times FY22's forecasted result and 42 times FY23's result.

Those are very very expensive metrics for a company that has just experienced peak earnings and is still enjoying very strong tailwinds from Covid The yield of 1.39% is well below the 10 year risk free Govt stock rate which is now over 2.6%.

I think FPH is very vulnerable to the downtrend continuing. For those that believe the worst of the pandemic is behind us, (I am not sure I am in than camp or not) this looks like a pretty good short opportunity to me.

Despite all this, this stock is well covered by 9 analysts which is very good coverage for a N.Z. stock, who undoubtedly know more about it than I do and the average price target is $31.71 so you should take my comments with the grain of salt they probably deserve.

For me. I don't believe super high PE's in near term earnings decline will work best in this environment...but like all things, time will tell.

Hope my friend Couta1 reads this post. Consider it a warning mate, I really don't like these metrics and the trend down is not your friend.

I rang the alarm bell in January at $28 as did many others.
Like a lot of Covid assisted stocks the bubble is in the process of bursting, certainly not fully burst yet. In the US stocks like Peleton which could do no wrong in the midst of the worst of Covid have lost a whopping 90% of their value, Netflix 70%...dozens of cases of Covid assisted companies in the US now trading at less than half their previous peak prices.

No reason FPH is or should be exempt from this. https://www.marketscreener.com/quote...30/financials/
It's still on a whopping 36 times average FY23 earnings which fundamentally with 10 year Govt stock at close to 4% is still super expensive in my book.
That and a very low yield of just 2% mean those metrics are certainly not attractive and from a TA perspective "Blind Freddy" can see this is in a steep and well entrenched decline.
I think anyone would be very "brave" indeed to apply fresh capital until there is genuine evidence from a TA perspective a new bottom has been reached.
I still think $15 is a very real chance which would be a forward PE of about 25. I know its a very high caliber company but that doesn't make it exempt to the reality that DCF valuations are being seriously affected by much higher interest rates.
Just as well the $N.Z. dollar has fallen hard as otherwise this would have fallen even harder in my opinion.
Disc: No position long or short.

[couta1]

I rang the alarm bell in January at $28 as did many others.
Like a lot of Covid assisted stocks the bubble is in the process of bursting, certainly not fully burst yet. In the US stocks like Peleton which could do no wrong in the midst of the worst of Covid have lost a whopping 90% of their value, Netflix 70%...dozens of cases of Covid assisted companies in the US now trading at less than half their previous peak prices.

No reason FPH is or should be exempt from this. https://www.marketscreener.com/quote...30/financials/
It's still on a whopping 36 times average FY23 earnings which fundamentally with 10 year Govt stock at close to 4% is still super expensive in my book.
That and a very low yield of just 2% mean those metrics are certainly not attractive and from a TA perspective "Blind Freddy" can see this is in a steep and well entrenched decline.
I think anyone would be very "brave" indeed to apply fresh capital until there is genuine evidence from a TA perspective a new bottom has been reached.
I still think $15 is a very real chance which would be a forward PE of about 25. I know its a very high caliber company but that doesn't make it exempt to the reality that DCF valuations are being seriously affected by much higher interest rates.
Just as well the $N.Z. dollar has fallen hard as otherwise this would have fallen even harder in my opinion.
Disc: No position long or short.

You can live without Netflix and Peleton equipment but not without oxygen for those that find themselves in the situation to need it, world population expanding and more and more people needing these products means a very prosperous future for this company, plenty more viral outbreaks to come in the future as well, short term "White Noise" is not the way to view FPH, thats just a traders perspective.

[Beagle]

Not true, I can't live without Netflix LOL.

[couta1]

Not true, I can't live without Netflix LOL.

Love the honesty and I must confess I've never watched it.

[LoungeLizzard]

Nothing personal but I don't get what you and many others can't understand...

1. The share price got overhyped in 2020
2. Profits were magnified by covid above the longer term sustainable growth rate
3. Many "investors" failed to understand point 2 above and overpaid
4. interest rates are now rising and high PE growth stocks like FPH get hurt by that
5. points 1-4 explain the share price the last 6-12 months
6. FPH is still a great company despite the share price performance the past 6-12 months.

I get all that, and I actually agree that at current levels FPH is undervalued. But my point stands that the Board needs to be a bit more vocal. The current negative environment notwithstanding, the fact remains that the company is in better shape now than it has ever been, yet the SP has been punished far more than other blue chip companies.
When Covid hit in early 2020 the SP was $24. NI for that year was 209m. We are now at $21 (and projected to fall further) when profit for the first half was 222m. Profits between those period were doubled. So given all that - EBIT, EPS, NP all still considerably higher than before covid, and likely to remain elevated for some time yet, why would the share price be well below that of the pre-covid price? Answers on a back of an envelope - send to Chief Communications Officer, FPH.

[couta1]

I get all that, and I actually agree that at current levels FPH is undervalued. But my point stands that the Board needs to be a bit more vocal. The current negative environment notwithstanding, the fact remains that the company is in better shape now than it has ever been, yet the SP has been punished far more than other blue chip companies.
When Covid hit in early 2020 the SP was $24. NI for that year was 209m. We are now at $21 (and projected to fall further) when profit for the first half was 222m. Profits between those period were doubled. So given all that - EBIT, EPS, NP all still considerably higher than before covid, and likely to remain elevated for some time yet, why would the share price be well below that of the pre-covid price? Answers on a back of an envelope - send to Chief Communications Officer, FPH.

I think your trying very hard to understand and explain an irrational market, I've found doing too much of that just makes one frustrated and angry, of course i agree with you that its currently undervalued.

[Beagle]

I think your trying very hard to understand and explain an irrational market, I've found doing too much of that just makes one frustrated and angry, of course i agree with you that its currently undervalued.

Quite the contrary, I think there's a perfectly rational revaluation of the company going on here.
Take care out there folks when buying in a steep and confirmed downtrend, the trend is definitly not your friend https://www.bing.com/images/search?v...t=0&ajaxserp=0

[LoungeLizzard]

[QUOTE=Beagle;956451]Quite the contrary, I think there's a perfectly rational revaluation of the company going on here.
Take care out there folks when buying in a steep and confirmed downtrend, the trend is definitly not your friend

Nope, disagree. Nothing rational about the revaluation if that's what it is. Either the SP was overvalued pre-covid at $24 or it's undervalued post covid at $21. Since all the fundamentals are way better now than then, I tend to believe the latter. But Couta is is right - no point in chasing shadows - the SP is what it is.