Relief on Wall Street | Fisher & Paykel Healthcare

27 November 2018

Global markets were higher overnight as US stocks rebounded after two bruising weeks, as investors bought into beaten down sectors such as energy and financials, while retailers gained on hopes of blockbuster sales on the largest online shopping day of the year. 

Political risks are back in the limelight, and European stocks also rallied after signs that Italy was preparing to rework spending plans that have fuelled tensions with the European Union.

As we touched on yesterday, one of the other political risks is the potential trade war between the US & China. The G20 leaders will meet in Argentina over Friday and Saturday and key will be whether the “side meeting” between Trump and Chinese premier Xi Jinping leads to any thawing in frosty trade relations.

 

Stock in Focus: Fisher & Paykel Healthcare (FPH:NZ / FPH:AX)

Fisher & Paykel Healthcare made gains yesterday after it lifted first-half profit 20% and affirmed annual earnings growth.
 

The breathing mask maker reported a record $97.4 million interim profit on record sales across its two divisions and said second-half earnings will rely in-part on how many people in the Northern Hemisphere get the flu. The company reiterated its full-year earnings forecast at $205 million to $210 million. The forecast assumes exchange rates of 67 US cents and 60 euro cents for the period, from 72 US cents and 59 euro cents for the prior March year. It also allows for an expected $20 million to $30 million spend on litigation for the full-year in its ongoing legal battle with ResMed.

Taking a bigger picture view, FPH has experienced strong market share and growth potential looking forward remains solid in our view given the tailwinds of an ageing population and our forecast for a weakening NZ dollar. We remain positive on FPH as a solid healthcare holding.

We currently have a BUY recommendation on Fisher & Paykel.

 
 

Australia & New Zealand Market Movers

The Australian share market lost ground yesterday (ASX 200 index -0.78%) with resource stocks falling hard as oil, bulk, precious and base metals fell. The major bank shares were mixed as the royal commission entered its 65th day. NAB shares closed a touch higher despite chief executive Andrew Thorburn and chairman Ken Henry facing the commission. Technology shares were more among the market's biggest gainers on Monday.

 

The New Zealand market sold off on Monday (NZX 50 index -0.45%) in light trading as blue-chip stocks including A2 Milk, Ryman Healthcare, and Fletcher Building followed Australia lower. Sky Network Television was the biggest gainer after announcing veteran British media executive Martin Stewart will take over as chief executive from February next year.

Metro Performance Glass slumped another 25% to a record close of 40 cents after reporting weaker first-half earnings, trimming annual guidance and suspending dividend payments. This was much worse than we had expected, and we will provide a full update in tomorrows weekly report for members. Eroad shares also dropped after reporting a narrower first-half loss, although increased operating costs were more than investors expected.

 

3 Things Markets Will be Watching this Week

1.              Trade relations between China and the US with the G20 summit talks at the end of the week.

2.              US Inflation and GDP data is published late in the week, with Fed Chair Jerome Powell also set to make a speech.

3.              The Reserve Bank of NZ releases its financial stability report on Wednesday.

 

Have a Great Day

Global markets were higher overnight as US stocks rebounded after two bruising weeks, as investors bought into beaten down sectors such as energy and financials, while retailers gained on hopes of blockbuster sales on the largest online shopping day of th

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