Fisher and Paykel Healthcare Stock – The Quiet Giant Holding Up the NZX

Fisher & Paykel Healthcare has an almost unyielding quality. This Auckland-based manufacturer of breathing devices just keeps showing up, day after day, keeping the NZX50 steady the way a heavy stone holds down a tablecloth in the wind, while the rest of the market spins itself into knots over Mag7 earnings and the Fed’s next move. The stock closed at 36.25 NZD on Wednesday, up 1.48 percent, and you could practically hear the collective shrug of investors who have grown accustomed to this kind of performance from FPH.

The company does not exhibit the typical behavior of a high-multiple healthcare stock. By most textbook standards, it should be a nervous holding at about 48 times earnings. Long-term investors aren’t selling, though. It’s been years since they were. Every time you speak with a New Zealand fund manager, you’ll hear them say the same thing: “We know what we have,” with that distinct Kiwi blend of pride and modesty. They feel that this is more than just a stock. It contributes to the nation’s economic identity.

The company, which was founded in 1934 as a part of an appliance dynasty and separated into the healthcare industry in 1969, has spent decades producing humidifiers, masks, nasal cannulas, and the tiny plastic parts that aid in breathing in hospital wards from Cleveland to Cologne. Demand increased during the pandemic in ways that nobody could have predicted. Many thought the share price would decline once it eased. Really, it didn’t. The Auckland-area factories continued to operate. Product lines continued to emerge. Additionally, the market capitalization, revenue base, and share count have all gradually increased in a way that annoys short sellers and benefits the patient.

It’s not a perfect story, of course. The stock has dropped about 3.4 percent so far this year, and Simply Wall Street analysts recently questioned the stock’s valuation, speculating that the price might have exceeded the fundamentals. The current level is significantly below the 52-week high of 41.40 NZD, which suggests that investor reluctance hasn’t entirely subsided. It’s possible that clarity will be provided by the upcoming May 26 earnings report, or it’s possible that the stock will continue to drift gently while it waits for a potential catalyst.

The loyalty is more difficult to describe. FPH is rarely discussed by US healthcare investors. While CNBC views the OTC ticker FSPKF as a curiosity, Bloomberg nods respectfully. However, in Australasia, the stock serves a similar purpose to a utility: it is reliable enough to be disregarded and essential enough to maintain. The news focuses on ResMed, its larger American cousin in respiratory care. The patient capital is obtained by FPH. It’s difficult to ignore how uncommon that kind of trust has become in contemporary markets as you watch this unfold over time.

The more general question is whether a business can continue to defend a P/E ratio that is close to 50. There has been growth, but it hasn’t been particularly rapid. The margins are respectable but not outstanding. However, investors continue to make payments, possibly wagering that stable hospital demand and aging populations throughout the developed world will keep the order books full. That wager might be correct. It might also be a wager that takes ten more years to really pay off. For the time being, FPH continues to operate in a discreet, profitable, and low-key manner. For once, the market appears content to allow it.