Fisher and Paykel Healthcare Stock Trades at 48x Earnings — And Long-Term Holders Aren’t Selling

Certain stocks don’t make headlines unless something goes wrong, don’t trend on Reddit, and don’t appear on CNBC’s lower thirds. Among them is Fisher & Paykel Healthcare. It has the reputation of a brand that made a generation of New Zealand investors wealthy without ever requesting credit, and it sits on the NZX with a market capitalization that has just surpassed NZ$21 billion. The stock fell roughly 13% from its 52-week high to close Tuesday at NZ$35.72. Not very dramatic. Long-term holders hardly notice this kind of pullback.

The difference between a US healthcare conference and a Fisher & Paykel Healthcare investor day in Auckland is almost comical. No theatrical CEO entrance, no eye-catching slides, and no quarterly exaggeration. Just engineers describing nasal high-flow systems and humidifiers with the dry seriousness of those who truly believe in small steps toward progress. The business started out as an importer of refrigerators in Auckland in 1934. The development of respiratory humidifiers for hospitals came later, almost as a side project in the late 1960s. Currently, New Zealand generates only 1% of its total revenue. The remainder is exported, with 27% coming from Europe and 42% from the United States.

Outsiders are confused by the valuation. a price-to-book of about 10, a price-to-sales of about 14.8, and a P/E ratio of 48. It should be a sell by the majority of screens. Trading at less than half those multiples is ResMed, the closest comparable. However, the premium has existed for years, almost as a characteristic of the stock rather than an anomaly. Long-term New Zealand fund managers believe that paying for FPH is just the price of owning quality that you don’t have to worry about. They might be mistaken. They have previously been referred to as incorrect. The chart hasn’t agreed yet.

The gradual growth of nasal high-flow therapy is what sustains the narrative. For more than ten years, the Optiflow and Airvo lines—quietly introduced into hospital intensive care units—have been outperforming more traditional oxygen-delivery techniques. The bullish argument is that adoption happens gradually, hospital by hospital and clinician by clinician. Switching is unlikely once a respiratory team has trained employees on a system. The management has long stated that constant-currency revenue should double every five to six years, and Q2 FY26 revenue increased 14.4% year over year to NZ$544 million. The numbers were stimulated by the pandemic and then unwound. Now, the COVID hangover has mostly subsided.

Underneath, there are genuine concerns. Calls frequently mention pricing pressure from US group purchasing organizations. Even though the company’s Mexico facility was taking on more volume, production planning was complicated by a 10% US tariff on goods made in New Zealand that was announced in early 2025. As Philips deals with the protracted fallout from its Respironics recall and ResMed expands its GLP-1 patient base, the consumer-facing segment of sleep apnea has been quieter. Contrary to what its market capitalization indicates, FPH is a much smaller, much older company that sits between these forces with patience.

It’s difficult to ignore the fact that brokers in Auckland frequently discuss FPH in a protective manner, much like Boston managers discuss Costco. For twelve years in a row, the dividend has increased. In the middle of April, JPMorgan started coverage with an Overweight rating. The long-term earnings trajectory is still intact, according to Morningstar’s analyst. Investors will have to make decisions on a quarterly basis regarding whether the stock should maintain its premium through another tariff cycle, another wave of cost pressure on hospitals, and another technological shift in respiratory care. For the time being, the order book expands, the share price fluctuates within its limited range, and the Karaka campus rises gradually outside of Auckland. Mostly boring. which has always been the main goal for the owners.