Transferring Coverage of Fisher & Paykel Healthcare

We maintain our NZD 11.00 and AUD 10.00 fair value estimates for narrow-moat-rated Fisher & Paykel Healthcare following the transfer of coverage to a new analyst. We are now more positive on near-term margins, and have lifted our 2019 net profit after tax forecast by 4% to NZD 214 million, slightly above management's updated guidance of NZD 205-210 million. Offsetting this is our increase 2019 capital expenditure forecast, to NZD 165 million, to more appropriately represent investment in new facilities in New Zealand and Mexico. Last trading at NZD 14.08, shares in Fisher & Paykel appear overvalued.