Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 358

On the pandemic front line: Fisher & Paykel Healthcare

Fisher & Paykel Healthcare stands out as a locally listed company that is playing a big role in the fight against COVID-19. It was also a stock that performed strongly during the recent market downturn.

Fisher & Paykel Healthcare Corporation Limited (FPH)

Source: ASX and Yahoo! Finance, as at 15 May 2020.

The Australian Ethical Charter requires us to invest in companies that contribute to human happiness and dignity. That means we actively seek out companies that have a positive impact on people's health and wellbeing. As a result, our portfolios tend to hold a higher proportion of healthcare companies compared with the benchmark.

Timing good for healthcare sector

There are also sound investment reasons to look for opportunities in healthcare. Companies in this sector tend to be fast growing with cashflows that are less susceptible to the economic cycle. They often have unique intellectual property. Fisher & Paykel meets these criteria and has a long track record of innovation and growth, making a range of medical devices including life-saving devices for adults, children and premature babies.

The healthcare sector is in the spotlight now as it mobilises to meet the increased burden created by the COVID-19 pandemic. This new respiratory disease causes some patients to ‘crash’ without warning to a point where they need help breathing. These patients tend to be intubated (ie, have a tube inserted into their trachea) and are then hooked up to a mechanical ventilator that breathes for them. This procedure is known as ‘invasive ventilation’. Tragically, some countries are so overwhelmed with cases that they simply do not have enough ventilators to go around.

Fisher & Paykel derives around 60% of its revenue from selling equipment and consumables to intensive care units (ICUs) and hospitals in the areas of invasive/non-invasive ventilation and respiratory support. When patients require invasive ventilation, the air needs to be moistened and warmed to body temperature and passed through tubes that minimise condensation. Fisher & Paykel is the world leader in these humidification systems.

The same humidification device also increasingly plays a role for patients who do not require invasive ventilation but do require some form of supplementary oxygen. These patients may either be in ICU or other parts of the hospital. The key innovation is the ability to deliver humidified oxygen at very high flow rates compared to standard oxygen therapy. Even prior to COVID-19, Fisher & Paykel were seeing strong uptake and growth in this ‘high flow’ technology platform where they are also the global leader.

Boost in demand

As ventilator suppliers rush to meet the increased medical demand, it is likely that this is boosting demand for Fisher & Paykel humidifiers. We expect Fisher & Paykel to rapidly scale up its production. Nasal high-flow is also likely to see increased demand, with one study of two hospitals in China finding that 63% of COVID-19 patients with severe acute respiratory failure were treated with high-flow oxygen therapy. As high-flow oxygen therapy is still a relatively new technology, it seems likely that the current crisis may speed up its growth even beyond the rapid uptake that was occurring prior to COVID-19.

Unsurprisingly, the share price of Fisher & Paykel has performed strongly over recent months and it is one of the top ASX 300 market performers this calendar year. However, unlike some other companies which have held up purely due to their defensive characteristics, Fisher & Paykel is playing a real and active role in mitigating the worst effects of the COVID-19 crisis. That’s good for patients, good for society and ultimately good for investors.

 

Mike Murray is an investment analyst at Australian Ethical, a sponsor of Firstlinks. This article is for general information and does not consider the circumstances of any investor.

For more articles and papers from Australian Ethical, please click here.

 


 

Leave a Comment:

     

RELATED ARTICLES

How are vaccines actually produced in bulk?

Most Australians live better than the Rockefellers

A hard dose reality check on vaccines

banner

Most viewed in recent weeks

Unexpected results in our retirement income survey

Who knew? With some surprise results, the Government is on unexpected firm ground in asking people to draw on all their assets in retirement, although the comments show what feisty and informed readers we have.

10 reasons wealthy homeowners shouldn't receive welfare

The RBA Governor says rising house prices are due to "the design of our taxation and social security systems". The OECD says "the prolonged boom in house prices has inflated the wealth of many pensioners without impacting their pension eligibility." What's your view?

Three all-time best tables for every adviser and investor

It's a remarkable statistic. In any year since 1875, if you had invested in the Australian stock index, turned away and come back eight years later, your average return would be 120% with no negative periods.

The looming excess of housing and why prices will fall

Never stand between Australian households and an uncapped government programme with $3 billion in ‘free money’ to build or renovate their homes. But excess supply is coming with an absence of net migration.

Five stocks that have worked well in our portfolios

Picking macro trends is difficult. What may seem logical and compelling one minute may completely change a few months later. There are better rewards from focussing on identifying the best companies at good prices.

Six COVID opportunist stocks prospering in adversity

Some high-quality companies have emerged even stronger since the onset of COVID and are well placed for outperformance. We call these the ‘COVID Opportunists’ as they are now dominating their specific sectors.

Latest Updates

Retirement

10 reasons wealthy homeowners shouldn't receive welfare

The RBA Governor says rising house prices are due to "the design of our taxation and social security systems". The OECD says "the prolonged boom in house prices has inflated the wealth of many pensioners without impacting their pension eligibility." What's your view?

Interviews

Sean Fenton on marching to your own investment tune

Is it more difficult to find stocks to short in a rising market? What impact has central bank dominance had over stock selection? How do you combine income and growth in a portfolio? Where are the opportunities?

Compliance

D’oh! DDO rules turn some funds into a punching bag

The Design and Distribution Obligations (DDO) come into effect in two weeks. They will change the way banks promote products, force some small funds to close to new members and push issues into the listed space.

Shares

Dividends, disruption and star performers in FY21 wrap

Company results in FY21 were generally good with some standout results from those thriving in tough conditions. We highlight the companies that delivered some of the best results and our future  expectations.

Fixed interest

Coles no longer happy with the status quo

It used to be Down, Down for prices but the new status quo is Down Down for emissions. Until now, the realm of ESG has been mainly fund managers as 'responsible investors', but companies are now pushing credentials.

Investment strategies

Seven factors driving growth in Managed Accounts

As Managed Accounts surge through $100 billion for the first time, the line between retail, wholesale and institutional capabilities and portfolios continues to blur. Lower costs help with best interest duties.

Retirement

Reader Survey: home values in age pension asset test

Read our article on the family home in the age pension test, with the RBA Governor putting the onus on social security to address house prices and the OECD calling out wealthy pensioners. What is your view?

Sponsors

Alliances

© 2021 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.