Shares in Fisher and Paykel hit another record high yesterday as the market rebounded from Monday's sell off, and on optimism that the respiratory products maker would benefit from the coronavirus outbreak.
The stock - the NZX's biggest by market capitalisation and one of many to rebound after a sharp selloff on Monday - ended the day at $25.94, up 34c, from Monday's close, having hit a record $27.00 earlier in the session.
The stock has been on a record breaking run over the past 12 months - it has rallied by 68 per cent over that time.
F&P Healthcare's gain helped drive the S&P/NZX50 index up 3 per cent to 11,453, following Monday's 1.4 per cent decline.
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"Notwithstanding the current premium F&P Healthcare is trading at, relative to both the market and its healthcare peer group, the market is assuming an upgrade to earnings from the coronavirus outbreak," Mark Brown, chief investment officer at Devon Funds Management said.
"This is quite possible given the respiratory nature of the disease and the substantial portion of revenue the company derives from ventilating patients within hospitals," he said.
Common signs of the coronavirus Covid-19 include respiratory symptoms, fever, cough, shortness of breath and breathing difficulties.
F&P Healthcare was to have held an investor day today but postponed it to focus on responding to the outbreak.
"The company will update the market in due course on a revised date," it said in a statement to the NZX last week.
F&P Healthcare makes and markets products and systems for use in respiratory care, acute care, surgery and the treatment of obstructive sleep apnea.
Forsyth Barr senior equity analyst Chelsea Leadbetter said any lift in respiratory-related illness has historically been beneficial to F&P Healthcare's product sales into hospitals.
"These type of events can also sometimes see hospitals purchasing extra hardware," she said.
"It is difficult to predict how this situation evolves, however at this point the number of people impacted is small in the context of FPH's global business," she said.
Last year, F&P Healthcare's products were used in the treatment of about 14 million patients across 120 countries.
That compares with 90,000 or so coronavirus cases detected so far after the disease first surfaced in the central China city of Wuhan late last year.
Leadbetter, noting the company's latest earnings upgrade, said that since the outbreak, F&P Healthcare had seen a step-change in hardware demand from China – "as you might expect given the increased hospital infrastructure which has been put in place."
She pointed out China makes about less than 5 per cent of the group's revenue.
The company has already upgraded its earnings forecasts twice in the last few months.
In its last earnings update on February 21, the company said that, assuming a NZ:US exchange rate of about 64 cents for the balance of the financial year, its full year operating revenue was likely to hit about $1.2 billion and for its net profit after tax to be in a range of $260m to $270m.
In its previous guidance, issued in November, was for operating revenue to be about $1.19 billion and net profit after tax to be $255m to $265m.
"We've seen better-than-expected sales in our homecare product group combined with continued strong growth in our Hospital product group," it said.
"This includes an increase in demand from China related to the Covid-19 coronavirus outbreak," Lewis Gradon, managing director and chief executive said.
The company has been fielding inquiries about possible impacts to the company's supply chain resulting from coronavirus.
F&P Healthcare does not have a manufacturing facility in China, but some of its suppliers of raw materials are based there.
"At this stage, we do not anticipate any significant impact on supply to our existing customers. We will continue to assess this on an ongoing basis, particularly if the outbreak escalates or continues for a prolonged period," Gradon said at the time.
"During this challenging time for China, we appreciate the efforts of our own team and our suppliers.
"Our people have been working long hours to ship products quickly, assemble them, and meet the need for training, particularly in Wuhan."
F&P Healthcare last year received regulatory clearance to sell a new, full-face obstructive sleep apnea (OSA) mask in the United States, which is the biggest market for the product.
The 2019 year was the first in the past three years that F&P Healthcare has not had to set aside big sums for legal costs after it agreed to settle all outstanding patient patent infringement disputes with its US competitor ResMed.
The settlement involved no payment or admission of liability by either side.
F&P Healthcare, whose earnings are mostly derived from offshore, benefits when the New Zealand dollar is weak.
The currency traded today at US62.5c, down from US66c in late January.
F&P's Healthcare's market capitalisation stands at $15.1b.
The next two biggest NZX-listed companies - a2 Milk and Meridian - level peg at around $12.4b each.