Fisher & Paykel Corporation Ltd (ASX: FPH) is a high quality ASX company that has beaten the market by a wide margin over the past year.
Fisher & Paykel is a New Zealand-based medical device company. It designs and manufactures life saving devices used in intensive care units and surgery theatres. The company operates in more than 120 countries and has built a strong reputation over decades.
Impressively, the company's High Flow Oxygen business has grown revenue at more than 20% per annum for the past decade.
In the most recent half-year result, it achieved 50% profit growth, which has attracted substantial investor interest. As a result, Fisher & Paykel shares have soared 29% over the past year. They have substantially outperformed the S&P/ASX200 Index (ASX: XJO) which is up around 7%.
Is it too late for investors to get on the bandwagon?
High barriers to entry
A major competitive advantage of Fisher & Paykel is its high barriers to entry. Its suite of High Flow oxygen devices are market leading, essential, and very difficult for competitors to replicate.
This also gives Fisher & Paykel substantial pricing power, allowing them to raise prices without impacting demand. It is also not particularly sensitive to economic cycles, making it a relatively defensive company, which may be especially appealing to investors in the current environment.
What about tariffs?
Fisher & Paykel certainly has some exposure to tariffs. It has manufacturing plants in Mexico and New Zealand, which make up 40% and 60% of production respectively. Around 55% of its production out of Mexico is sold into the United States.
Earlier in the year, the US announced 25% tariffs on Mexican imports. However, more recently, the US revoked its 25% tariffs on Mexican manufacturers that comply with the United States-Mexico-Canada agreement (USMCA). This includes Fisher & Paykel, which is good news for investors.
However, the company still faces a 10% tariff on products manufactured in New Zealand.
Is it a buy?
As reported by Capital Brief, UBS recently downgraded its 12 month position on Fisher & Paykel shares from 'buy' to 'neutral'.
However, the broker raised its 12 month price target from NZ$37.3 ($34.26) to NZ$39 ($35.83).
At the time of writing, its shares are trading hands for $33.84, suggesting around 6% upside from here.
UBS analysts believe the current share price accurately reflects a more limited tariff impact and likely strong earnings per share growth.
While perhaps not the most compelling ASX 200 investment today, it remains a high-quality business that at least deserves a spot on any ASX investor's watchlist.
Fisher & Paykel will announce its financial results for the year ended 31 March 2025 on 28 May. This should give interested investors better insight into the company's trajectory.
