FPH - Fisher Paykel Healthcare.

[couta1]

And For Bars view..

F&P Healthcare's (FPH) FY22 downgrade marks the first genuine insight into what the transition to a post COVID world may look like,
and it's not a good start. We estimate that 2H22 EBIT will be down ~-50% versus 2H21 (off a high base) and below 2H20 which only
had a modest contribution from COVID-19 demand. Our proprietary revenue proxy also suggests that revenue has decelerated
meaningfully towards the end of 2H22 which adds further questions to what FY23 may look like. We think FY23 is likely to be the
'new base' but believe it could be challenging with significant negative operating leverage, as operating expenses continue to grow and
freight costs are expected to remain elevated while a rebound in revenue may take time to materialise. Looking beyond this,
we continue to see FPH as well positioned to deliver long-term revenue growth and see a return to its long-term margin targets.
Trading on ~46x 12m forward PE, which is a modest premium to peers on an absolute and relative basis, we retain NEUTRAL with a
reduced target price of NZ$25.05.
What's changed?
First time FY22 quantitative guidance provided
FPH provided FY22 revenue guidance of between NZ$1,675m and NZ$1,700m (we estimate implied hospital consumables revenue
of ~NZ$900m and hospital hardware of ~NZ$320m — both of which were below our and consensus expectations). Full year gross
margins are expected to be ~62.5%, with the deviation relative to its long term target (~65%) principally attributable to freight costs.
FPH retained full year SG&A costs guidance for ~+9% growth relative to FY21. Highlighting FPH's ongoing cost investment, we
estimate that 2H22 EBIT will be below 2H20 despite revenue being ~NZ$100m higher with 2H22 likely to be FPH's lowest second
half EBIT margin since 2014 (~25%), down from the elevated base of 38% in 2H21.
What does FY23 look like? Negative operating leverage likely a key feature
The revenue trajectory is the key unknown but we believe FY23 is likely to be the 'new base'. That said, the absolute base level and
subsequent use of its products was made no clearer. There is a wide range of outcomes but we expect it to be a multi-year period
before FPH fully utilises its materially increased base of hospital hardware. Despite this uncertainty we think the trajectory of the
cost base is relatively clear with limited variation irrespective of the revenue path. Consistent with history, we expect FPH to grow
operating expenses by ~+8–10% annually over the medium-term as it continues to invest for growth. While we consider this both a
value add and necessary strategy, it brings with it some short term risks to earnings. At this juncture, we assume downside risk to
FPH's long term EBIT margin target (~30%) and forecast a base of ~27% in FY23 with a gradual recovery over the medium-term.

Two key sentences in this for longs are 1.We continue to see FPH as well positioned to deliver long term revenue growth and 2.Consistent with history we expect FPH to grow.

[Rawz]

SP capitulation?

I am going to ride this out and look to add around $20 to lower total holding cost.
Two learnings from holding this stock:

1) I desperately need to learn technical analysis skills. I previously didnt pay much attention to it being a long term investor but its clear you can save yourself lots of coin if you watch the squiggly line. Can anyone recommend any good youtube channels or books?

2) I think i am going to shy away from high P/E stocks in future. Look at HLG, recently announced a 40% drop in NPAT and the SP goes up.. FPH trading on such a high multiple it couldnt afford a drop in sales and margin. Priced for perfection. I'm going to move more weightings to the GARP stocks

Last two years investing have been easy. This year much much harder. Lots of learnings!

[Beagle]

And For Bars view..

F&P Healthcare's (FPH) FY22 downgrade marks the first genuine insight into what the transition to a post COVID world may look like,
and it's not a good start. We estimate that 2H22 EBIT will be down ~-50% versus 2H21 (off a high base) and below 2H20 which only
had a modest contribution from COVID-19 demand. Our proprietary revenue proxy also suggests that revenue has decelerated
meaningfully towards the end of 2H22 which adds further questions to what FY23 may look like. We think FY23 is likely to be the
'new base' but believe it could be challenging with significant negative operating leverage, as operating expenses continue to grow and
freight costs are expected to remain elevated while a rebound in revenue may take time to materialise. Looking beyond this,
we continue to see FPH as well positioned to deliver long-term revenue growth and see a return to its long-term margin targets.
Trading on ~46x 12m forward PE, which is a modest premium to peers on an absolute and relative basis, we retain NEUTRAL with a
reduced target price of NZ$25.05.
What's changed?
First time FY22 quantitative guidance provided
FPH provided FY22 revenue guidance of between NZ$1,675m and NZ$1,700m (we estimate implied hospital consumables revenue
of ~NZ$900m and hospital hardware of ~NZ$320m — both of which were below our and consensus expectations). Full year gross
margins are expected to be ~62.5%, with the deviation relative to its long term target (~65%) principally attributable to freight costs.
FPH retained full year SG&A costs guidance for ~+9% growth relative to FY21. Highlighting FPH's ongoing cost investment, we
estimate that 2H22 EBIT will be below 2H20 despite revenue being ~NZ$100m higher with 2H22 likely to be FPH's lowest second
half EBIT margin since 2014 (~25%), down from the elevated base of 38% in 2H21.
What does FY23 look like? Negative operating leverage likely a key feature
The revenue trajectory is the key unknown but we believe FY23 is likely to be the 'new base'. That said, the absolute base level and
subsequent use of its products was made no clearer. There is a wide range of outcomes but we expect it to be a multi-year period
before FPH fully utilises its materially increased base of hospital hardware. Despite this uncertainty we think the trajectory of the
cost base is relatively clear with limited variation irrespective of the revenue path. Consistent with history, we expect FPH to grow
operating expenses by ~+8–10% annually over the medium-term as it continues to invest for growth. While we consider this both a
value add and necessary strategy, it brings with it some short term risks to earnings. At this juncture, we assume downside risk to
FPH's long term EBIT margin target (~30%) and forecast a base of ~27% in FY23 with a gradual recovery over the medium-term.

Thanks for sharing. Most experienced investors know downgrades normally come in 3's. 46 times FY23 earnings looks FAR too expensive in the circumstances and the drop off in demand late in the half suggests its even potentially worse than a 25% fall looking forward into the next period of trading...not to forget that FPH is still enjoying huge tailwinds from Covid, for now but for how much longer ?. Hmmm

Start by reading this thread Rawz. https://www.sharetrader.co.nz/showth...ries-and-exits
TA is your best tool in times of great uncertainty like this. Anyone with excess hubris about their FA skills who ignores TA completely in these uncertain times is leaving themselves wide open to getting a brutal haircut. Good that you are looking to learn new skills.
Trust me on this mate. The most money is made when both FA and TA say a stock is a buy. When both suggest its a SELL, run for the hills !!

[JohnnyTheHorse]

Bigger volume today and big red candle... looks like funds may have made decisions to trim positions after fully analysing things. Great volatility for us traders, even if things didn't go as expected!

[alokdhir]

Bigger volume today and big red candle... looks like funds may have made decisions to trim positions after fully analysing things. Great volatility for us traders, even if things didn't go as expected!

Why more bearish at NZX vs ASX ...ASX is always closing much better then NZX though volumes are good at ASX too ...Does it tell anything specific ?

[percy]

Why more bearish at NZX vs ASX ...ASX is always closing much better then NZX though volumes are good at ASX too ...Does it tell anything specific ?

Perhaps Australian investors do not rea Sharetrader.?

[winner69]

OMG - Forbars say a forward PE of 42

If they wrote that last April was about $35 and their guru analysts calculated FY22 EPS was only going to be about 59 cents they would have said 'forward PE of 60' and still said NEUTRAL

share price being down more 30% since then

The much revered Benjamin Graham described “investment” as buying a security at a valuation that is associated with a reasonable expectation of acceptable long-term returns, based on a careful analysis of the relationship between the current price and the assets and cash flows of the business. He also observed, “The habit of relating what is paid to what is being offered is an invaluable trait in investment.” In contrast, “speculation” involves buying a security simply on the expectation that its price will advance. If you are not using well-defined and historically reliable valuation measures as a basis for investment, and you don’t have a well-defined and historically validated basis on which to expect speculative behavior from other investors, you’re probably gambling.

[winner69]

Downgrades come in __________. This has a wicked bad chart, 200EMA about to cross down through 400EMA (people think 50/200 is bad). Over halfway through the Covid March 2020 panic selldown now. More than 400 trading days since the lofty high and 38% down. This has been going on for a long time now, initially leakage with strong support rebounds but lower highs, but lately that's well and truely over, with the steep down days on sizeable volume. There is no obvious technical support until the Covid low around $21, assuming it holds.

Some see crossing the 200EMA as a BUY signal .... buy more / top up while cheap

As such I see today as an UP day for FPH share price

[winner69]

Perhaps Australian investors do not rea Sharetrader.?

They read hotcopper ..... some clever people on that hotcopper

[alokdhir]

Perhaps Australian investors do not rea Sharetrader.?

Perfect ...some like Forbars FPH report but not on other stocks !!!