FPH hospital hardware and gross margin beat expectations; Goldman Sachs maintains Buy

Overview

This is a Goldman Sachs company research first-take report on Fisher & Paykel Healthcare Corp. (FPH.AX). The report believes that FPH's FY26 revenue and NPAT were broadly in line with guidance after the February 2026 trading update, but hospital hardware, gross margin, and FY27 guidance provided stronger positive signals. Goldman Sachs maintains its Buy rating.

Core views

The core view is that FPH remains in an earnings upgrade cycle. The hospital business is being driven by higher adoption of Airvo 3 and F&P950, while high-flow therapy is expanding across more hospital settings, leading to higher consumables usage. Despite headwinds from U.S. tariffs and Middle East conflict-related costs, FY26 gross margin still beat Goldman Sachs and market expectations, and the FY27 gross margin outlook also points to year-on-year improvement.

Analysis framework

The report uses a results first-take approach, comparing FY26 actual revenue, segment revenue, gross margin, EBIT, and NPAT against GS and Visible Alpha consensus, and combines this with company FY27 guidance for revenue, NPAT, and gross margin to assess the earnings trend. The target price uses a 50%/50% blended valuation of 10-year DCF and EV/EBIT, together with FPH's valuation premium relative to the ASX200 and global MedTech growth stocks.

Methodology notes

• Valuation method10-year DCF and EV/EBIT blended valuation

  Target price consists of 50% DCF and 50% EV/EBIT

  DCF uses an 8.4% WACC and a 4.0% terminal growth rate, covering FPH's existing business as well as new opportunities such as the U.S. NHFT homecare market; the EV/EBIT multiple references FPH's historical premium relative to the ASX200 and peers, adjusted for growth differentials.

• Factor analysisGS Factor Profile

  Growth, financial returns, valuation multiples, and composite percentile

  Goldman Sachs uses metrics such as forward sales growth, EBITDA growth, EPS growth, ROE, ROCE, CROCI, and P/E, P/B, EV/EBITDA to compare the stock's percentile ranking relative to the market and industry peers.

• M&A scenarioM&A Rank

  Probability tiering of being an acquisition target

  Goldman Sachs globally rates the probability of a company becoming an acquisition target on a scale of 1 to 3; if rated 1 or 2, an M&A component is typically included in the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Fisher & Paykel Healthcare Corp. (FPH.AX)

  Covered company, Buy rating maintained

  Strengths

  The hospital business accounts for more than 60% of group revenue, with NHFT consumables as the main growth driver; new products such as Airvo 3 and F&P950 are expanding hospital use cases; FY27 guidance reflects solid growth in revenue and NPAT.

  Weaknesses

  FY26 NPAT was 1.9% below GS, and hospital consumables were below both GS and consensus; U.S. tariffs and cost inflation weighed on gross margin.

  Comparison

  FPH has traded at an approximately 1.5x to 4.5x valuation premium to the ASX200 over the past 10 years; Goldman Sachs uses a premium close to the upper end of that range, citing expanding opportunities in anesthesia and stronger growth characteristics.

  Risks

  A meaningful slowdown in U.S. hospital procurement, declining market share, failure of the NHFT U.S. homecare clinical trial, and tariff and geopolitical cost pressures above expectations.

Key data

• FY26 revenue$2,308m0.1% above GS and 0.4% above consensus.
• Hospital business revenue$1,505m0.4% below GS and 0.9% above consensus; hospital hardware grew +27% at constant currency.
• Hospital consumables revenue$1,324m1.9% below GS and 0.9% below consensus.
• Homecare revenue$803m1.0% above GS and 0.2% below consensus.
• Gross profit$1,470m0.2% above GS and 0.7% above consensus.
• Gross margin63.7%8bps above GS and 22bps above consensus.
• EBIT$636m0.3% below GS and 0.6% above consensus.
• NPAT$469m1.9% below GS and in line with consensus.
• FY27 revenue guidanceabout $2.45b to $2.57bBased on April 30 exchange rates.
• FY27 NPAT guidanceabout $500m to $550mThe midpoint implies about 12% growth, as described by Goldman Sachs.
• FY27 gross margin outlookoverall year-on-year improvementThe company expects the net impact of U.S. tariffs and Middle East conflict on gross margin to be about 50bps.
• Target priceA$42.3Based on a 50%/50% blended valuation of 10-year DCF and EV/EBIT.

Impact & implications

If hospital hardware growth and high-flow therapy penetration continue to deliver, FPH's hospital consumables demand, gross margin, and earnings upgrade potential may continue to support its valuation premium. The report also notes that a slowdown in U.S. hospital procurement, market share losses, or failure of the NHFT U.S. homecare clinical trial could weaken the Buy thesis.

Risks

• A material slowdown in U.S. hospital procurement.
• A decline in FPH's market share in the hospital or homecare markets.
• Failure of the NHFT U.S. homecare clinical trial.
• A greater-than-expected drag on gross margin from U.S. tariffs, cost inflation, or Middle East conflict-related costs.

What to watch

• Whether FY27 revenue falls within the guided range of $2.45b to $2.57b.
• Whether FY27 NPAT falls within the guided range of $500m to $550m.
• Whether hospital hardware growth can continue to drive higher high-flow therapy and consumables usage.
• Whether FY27 gross margin can improve year on year despite tariff and cost pressures.
• Reimbursement, clinical trial, and commercialization progress in the NHFT U.S. homecare market.