Fisher & Paykel (ASX: FPH) Beats Expectations With 14% Revenue Growth: Time to Buy or Hold Off?

Fisher & Paykel Healthcare (ASX: FPH) jumped 8 per cent to $34.52 after delivering first-half results that comfortably beat market expectations. Revenue rose 14 per cent to $1.09 billion, while operating profit surged 31 per cent, prompting management to lift full-year guidance. For investors, the results show this is a strong healthcare company performing very well. The question is whether the strong momentum justifies the premium valuation or if tariff risks could derail the growth story.

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Fisher & Paykel Delivers Broad-Based Strength Across Both Divisions

Fisher & Paykel is a New Zealand-headquartered medical device company specialising in respiratory care products for hospitals and sleep apnea treatment for home use. With a market capitalisation of approximately NZ$21 billion, it ranks among Australasia’s largest healthcare companies. Its humidifiers, breathing circuits, and CPAP masks are used in more than 120 countries, with the US accounting for roughly 43 per cent of revenue.
What makes this result particularly impressive is the quality of the earnings growth. Gross margin expanded to 63 percent, up 110 basis points from the prior year. This is significant because it demonstrates the company can grow revenue while simultaneously improving profitability, a hallmark of well-managed businesses with genuine pricing power.
The hospital division was the standout contributor, with revenue reaching $692.2 million, up 17 percent. Notably, this strength came despite a relatively mild respiratory season, suggesting structural adoption of the company’s high-flow therapy products rather than seasonal tailwinds. Homecare also delivered steady growth, with revenue rising to $395.9 million, an increase of 10 percent, driven by strong uptake of newer sleep apnea masks.
The upgraded guidance reflects management’s confidence. Full-year revenue is now expected to be between $2.17 billion and $2.27 billion, with a net profit of $410 million to $460 million, both lifted from August’s forecasts.

Tariff Exposure Remains the Key Risk to Watch

However, investors should be mindful of one emerging headwind. Fisher & Paykel manufactures approximately 45 per cent of its volume in Mexico, with around 60 per cent of US volumes supplied from those facilities. US tariffs on Mexican imports have already begun impacting margins.
The company continues to expect to reach its gross margin target of 65 per cent, though US tariffs may have added “two to three years” to that expectation. Management estimates tariffs will reduce gross margin by around 75 basis points annually, partially offsetting efficiency gains. This does not threaten the current business, but it lengthens the path to full margin potential.

The Investor’s Takeaway

The board declared an interim dividend of 19 cents per share, up from 18.5 cents last year, continuing the company’s track record of steady dividend growth.
At current prices, the stock trades at around 55 times trailing earnings, roughly double the medical devices industry median of 28 times. In our view, Fisher & Paykel deserves a premium given its market-leading position, consistent execution, and long runway for growth. However, at these levels, much of the near-term upside appears priced in.

The bottom line: Fisher & Paykel delivered an excellent first half that reinforces its status as a healthcare compounder. For existing holders, the results justify staying the course. For new investors, the valuation leaves limited margin for error; patient buyers may find better entry points on pullbacks.