Fisher and Paykel Healthcare's share price traded through some big ranges this week as investors tried to come to terms with what the coronavirus pandemic will mean for the company's earnings.
East Tamaki-based F&P Healthcare - which specialises in respiratory products - said it had been classed as an essential service and would continue its operations while most of the country was in coronavirus lockdown.
The company has ramped up its manufacturing output and that this would continue under the level 4 alert status.
Last week, chief executive Lewis Gradon said a lower New Zealand dollar and increased demand resulting from the outbreak would lift its earnings by a range of $275-$280 million this financial year, which is about to end on March 31, from a previous guidance of $260-$270m.
• Premium - Will Fisher and Paykel Healthcare benefit from the coronavirus outbreak?
• Premium - Why F&P Healthcare continues to break through new highs
• F&P Healthcare ends its golden run after US legal action
• Fisher & Paykel Healthcare shares sink after German patent decision
Analysts said it was clear that F&P Healthcare would stand to benefit from the pandemic but they pointed out the stock was one of the market's most expensive in terms of its price earnings ratio - even before the outbreak last December.
This week F&P Healthcare - New Zealand's biggest company by market capitalisation - traded as low as $27.00 and as high as $30.90 - a range of nearly $4.00 - in just one day.
Forsyth Barr senior analyst Chelsea Leadbetter said she expected further "tailwinds" arising from the lift in demand for its hospital products.
"There is no doubt the company is well positioned, with its products in high demand - and vital for critical patients - and a strong balance sheet.
"However, FPH was already one of the most expensive global medical device companies leading into Covid-19 and has outperformed to date in 2020," she said.
Leadbetter said the company's share price reflected a fluid situation.
"There is a lot going on. Things are changing quite quickly and there are a number of businesses that will be disrupted," she told the Herald.
"They (FPH) are in a relatively strong position in the sense that their products are absolutely critical, and the company is benefiting from higher demand, but I guess before we went into this we thought the company was expensive.
"Now we are seeing a demand spike, but we don't currently think that there will be a material sustained uplift going forward," she said.
F&P Healthcare is often lumped in with America's ResMed, which is also listed in Australia, but there are key differences.
The Kiwi company's hospitals segment is the crown jewel - representing 60 per cent of earnings - whereas ResMed does not have the same level of exposure.
F&P Healthcare makes humidifiers that are attached to ventilators commonly used in intensive care units.
"Obviously, it's unusual to be talking about it in a positive light in the sense that they are demand beneficiaries when we are in such a crazy situation, and when we are talking about people being quite sick," Leadbetter said.
There were broader issues at stake beyond the kind of valuation the market was putting on F&P Healthcare.
"At the end of the day, this is a fantastic New Zealand business," she said.
"In these types of situations they have got the capacity available to help people, which I think is the most important thing that we need to worry about at this point."