Fisher & Paykel Given a Boost by Pandemic, but Optiflow Adoption Is What Matters in the Long Term

Fisher & Paykel Healthcare has been a beneficiary of the coronavirus pandemic with increased demand for hospital hardware items driving two recent profit upgrades. We increase our near-term outlook for fiscal 2021, however, we don’t expect the longer-term benefit of higher consumable sales to support the larger installed hardware base to be significant. Consumables usage, which contributes between 85% and 90% of hospital revenue, is driven by patient turnover within hospitals which we would expect to normalise post-pandemic. We increase our fair value estimate to NZD 19.00 (AUD 17.90) from NZD 17.90 (AUD 17.00), but shares screen as overvalued.