Fisher and Paykel (ASX:FPH): It exports sleep apnea products to 120 countries, but here’s why ResMed is a better buy

If there was one ASX company brutally honest about the fact that it could not escape an impact from Trump’s tariffs, it was Fisher and Paykel (ASX:FPH). Of course, this was not just because of the tariffs themselves but forex movements and the economic environment.

FPH shares fell over 15% in just two months from mid-January 2025 to mid-March 2025. But shares have made back up almost all of the lost ground. Was it much ado about nothing, or is the impact still to come?

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Fisher and Paykel: We’re talking about the medtech, not the home appliance maker

Now, some readers may know the name Fisher and Paykel from its home appliances (i.e. washing machines) and wonder whether or not we are talking about that company. The home appliance maker has been distinct from the medtech maker since 2001 but they used to be one company and neither company changed its name post-split even though the appliance maker became a part of the Haier Group (in other words, it was taken over and now is a subsidfiary).

The original company was founded in mid-1930s New Zealand and began in home appliances, then got into medical devices in the late 1960s, starting with respiratory humidifiers. Over the next three decades the medical division expanded internationally and diversified its product range into acute respiratory support, sleep-apnea therapy and related clinical areas

FPH’s business model is centered on products for respiratory care and obstructive sleep apnea, including humidification systems, ventilator circuits, CPAP masks and related equipment, with sales into more than 120 countries. The company manufactures its products mainly in facilities in New Zealand and Mexico and generates a substantial portion of revenue from the United States, which remains its largest export market. And this is where investors have been concerned.

Trump’s tariffs: A threat or not?

In early 2025, the U.S. government under President Donald Trump introduced a new tariff regime that imposed 25% tariffs on many imports from Mexico and Canada and a 10% tariff on imports from China, effective February 4 2025.

Now, almost all FPH products imported into the U.S. from Mexico remain compliant under the U.S.-Mexico-Canada Agreement and thus largely avoid tariffs. But the broader tariff environment nonetheless has a direct impact on the company’s cost base because it sources a significant share of its U.S.-destined volume from Mexican factories and still imports some products from New Zealand that are now subject to a 10% U.S. duty.

FPH publicly stated that it did not expect a material impact on net profit after tax for FY25 and indeed this did not come to fruition. This being said, the company admitted costs are likely to increase in the 2026 financial year as a consequence of these trade barriers. Tariff-related cost pressures are expected to delay the company’s timeline for achieving its long-term gross margin target of roughly 65% by two to three years.

Management has emphasised long-term relationships with suppliers and customers and a strategy of continuous improvement to mitigate the effects of tariffs, and brokers including Citi and Morgan Stanley have later described the tariff impact as manageable, with most Mexico-manufactured products exempt from the tariffs and margin drag expected to be relatively modest over time.

Market reaction to tariff news caused share price volatility in early 2025 as investors digested the implications of higher costs and delayed margin expansion. But as we mentioned, things have smoothed out ever since from a share price perspective.

Analysts have a mixed view. On one hand, they call for $1.95bn revenue and a $387.6m profit for FY26, then $2.2bn revenue and a $440.5m profit for FY27. The other, they have a mean target price of A$33.79, just 2% ahead of the current price. FPH’s multiples aren’t exactly cheap with 50.5x P/E and 2.9x PEG for the year ahead.

Our view

The fears investors had this time last year were overblown. Nonetheless, we would feel safer investing in ResMed (ASX:RMD) right now because we can be more confident that there’ll be less of an impact from its tariffs as it is a US company and has been formally exempt from tariffs.