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Why Goldman Sachs just put a sell rating on Fisher & Paykel shares

The healthcare sector has been one of the best-performing sectors for ASX share market investors over the past decade and given the tailwinds of ever greater public and private spending on healthcare it’s not hard to see why. Companies like Cochlear Ltd (ASX: COH), CSL Limited (ASX: CSL) and ResMed Inc. (ASX: RMD) have all thumped the market over that period. 

The Fisher & Paykel Healthcare Ltd (ASX: FPH) share price has also more than tripled over the past 5 years as the sleep treatment specialist grows sales, profits and dividends.

Today the ASX-listed shares change hands for $14.63, but could have some down days ahead if the analysts at Goldman Sachs are on the money with their $13.90 12-month share price target on the business. 

The price differential means Goldman’s has a sell rating on shares partly because it feels Fisher & Paykel could continue losing market share in the key space of treating sleep apnea via the sale of masks. It is also paring back its expectations for gross margin growth with margins being key drivers of analyst ratings for medical device businesses. 

However, on the plus side the analysts acknowledge they may be too bearish if Fisher & Paykel’s new face mask gains FDA approval sooner than expected and sales take off. 

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Tom Richardson owns shares of Cochlear Ltd., CSL Ltd., and ResMed Inc.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. and CSL Ltd. The Motley Fool Australia has recommended Cochlear Ltd. and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.