Is Fisher & Paykel Healthcare (ASX:FPH) a Buy After Upgrading Guidance? The Tariff Risk Investors Are Ignoring

Fisher & Paykel Healthcare (ASX: FPH) lifted its FY26 guidance on Monday, now expecting around NZ$2.30 billion in revenue and NZ$450 million to NZ$470 million in net profit. Both figures sit comfortably above what management guided three months ago, and the shares rose around 4% to A$32.91. Strong hospital product sales and better margins are driving the upgrade, which tells us the business is performing well. Yet the stock has gained just 2% over the past year, while the broader ASX 200 is up roughly 9%. We believe the gap comes down to one word: tariffs. As of today, the legal battle moves from the courtroom to the balance sheet as the new Section 122 surcharges take effect.

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Hospital Growth Accelerates as Fisher & Paykel Changes Clinical Practice

The story behind this upgrade is encouraging. FPH’s hospital products, including respiratory care devices and humidification systems, are seeing strong demand. New products like the Airvo 3 are helping hospitals use FPH’s therapies in ways they did not before. Hospital revenue grew 17% in the first half, and gross margins expanded to 63% as the company got more efficient in its manufacturing.

What makes this upgrade stand out is that the profit floor has been raised by roughly 10%. That is not a small adjustment. It tells us management has real confidence in the second half. CEO Lewis Gradon pointed to progress in changing how hospitals treat patients with respiratory issues, which is the long game here. If more hospitals worldwide adopt FPH’s approach, that creates a growth engine that can run for years.

There is also a hidden bonus. The updated guidance does not include any potential refund of US tariffs already paid this year. If those refunds come through, there is upside not yet baked into the numbers.

The Tariff Problem FPH Can’t Fully Escape

Here is where things get complicated. On February 20, the US Supreme Court ruled 6-3 that Trump’s IEEPA tariffs were illegal. For Fisher & Paykel, which earns about 43% of its revenue from the US, that sounded like great news. The company had already taken a margin hit from those tariffs, and the ruling opens the door to refunds.

But Trump moved fast. Within hours, he imposed a new 15% tariff under a different law, Section 122 of the Trade Act. This one is temporary, lasting up to 150 days, but it still adds cost pressure.

FPH’s manufacturing split helps soften the blow. About 60% of what the company sells in the US comes from its Mexico factories, and those products are exempt under the USMCA trade agreement. However, the rest of the ships from New Zealand and faces the full 15% tariff. In our view, Fisher & Paykel is handling this about as well as any company could, but until there is clarity on refunds and what happens when Section 122 expires in July, uncertainty will weigh on the share price.

The Investor’s Takeaway for Fisher & Paykel

Fisher & Paykel Healthcare is a quality business doing the right things. The guidance upgrade confirms real demand, not just accounting tailwinds. But the stock is cheaper relative to its trajectory than it has been recently, largely because of trade policy noise.

For patient investors, this looks like a reasonable time to start building a position gradually. For those who prefer to wait, the full-year result in May should bring clarity on tariff refunds and the path forward.