Thursday, July 21, 2011

Resmed kicking Fisher & Paykel Heathcares butt?

An interesting take on Fisher & Paykel Healthcare's [FPH.NZX] flagging share price of late from the Melbourne Age' "Insider".

Ian McIlwraith has heard "whispers" that Australian company Resmed Inc [RMD.ASX] may have taken market share in the sleep apnea sector that FPH excels in and is the technological leader:

"A little like a Tour de France rider who falls off the back of the pack, though, the shares are showing little sign of being able to bridge the gap in the near term without a significant shift in fortunes.

They have jagged their way down to yesterday, threatening to break under the $NZ2.50 level, and there is a whisper around that one reason for the decline is that Resmed, which competes in a similar space on sleep relief products, has been nicking market share from FPH.

Certainly Resmed's stock has risen from about $2.85 to just short of $3.10 a share in recent weeks - although that raises a ''chicken and egg'' question. Is the rise in Resmed because it is beating FPH in a commercial sense, or because investors are switching from one to the other?

Resmed is due to report its results on August 5, which might clarify the situation". Melbourne Age , July 21 2011

I have not heard these "whispers" and as McIlwraith pointed out himself FPH's May profit announcement that ends the FY period to March 31 2011 was ahead of expectations and the company was very positive about the coming 12 months in terms of sales increases.

Resmed would have had to have taken market share off FPH since the end of balance date for full year 2011 for the "whisper' to have any validity and I am still inclined to think that the flagging share price can be put solely down to the low US dollar that the bulk of company revenue is denominated in and the relatively higher kiwi dollar against other currencies rather than a hit from their main competitor.

I am looking to buy this stock at around current prices and did the last time this stock was around these levels 3 years ago.

The reason why I am a little skeptical about the claim this author makes is that FPH stock was trading below current levels 3 years ago in a market pre the 2008 market crash with the currency at similar high levels - close to 80c from memory - and no question of poor sales or impacts from Resmed or any other competitor.

As the author has indicated though, prospective investors in FPH might want to wait until Resmed's profit result early out early August and even then there will only be a 3 month indication of any impact by them on FPH sales so if there have been any sales taken from FPH one quarter isn't a concrete result for Resmed or a material impact for Fisher and Paykel Healthcare.


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