On Wednesday, JPMorgan adjusted its position on Fisher & Paykel Healthcare (FPH:NZ) (OTC: FSPKF), downgrading the stock from Neutral to Underweight and setting a new stock price target of NZD23.00, decreased from the previous NZD24.00. The adjustment follows the company's optimistic profit growth forecast for fiscal year 2025, which anticipates an increase of 17-36%.
The company's guidance suggests a return to its historical pattern of low-double-digit top-line growth, depending on the severity of the COVID-19 and flu seasons, alongside an expected recovery in margins. JPMorgan's revised forecast now includes a $25 million foreign exchange tailwind, which surpassed their initial $12 million assumption. Despite the positive outlook, the firm anticipates a slower margin recovery from fiscal year 2026 onwards.
JPMorgan acknowledges the company's encouraging business trajectory and expects mid-teens profit growth to persist throughout the decade. Still, the firm notes that the stock has already increased by 20% since the half-year result, suggesting that the current share price may already account for the anticipated growth.
The downgrade to Underweight is based on the view that there is limited potential for further outperformance of the stock. The new stock price target of NZD23.00 is derived from a discounted cash flow analysis with a September 2025 projection, marking a reduction from the previous March 2025 price target of NZD24.00.
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