ResMed Inc. Sees Strong Growth Amid Positive Earnings Report
With a market cap of $35.8 billion, ResMed Inc. (RMD) stands out as a global leader in medical devices and cloud-based software for treating sleep-disordered breathing (SDB) and other respiratory issues. The company operates in two main segments: Sleep and Respiratory Care, and Software-as-a-Service, delivering innovative solutions for respiratory health management.
Over the past 52 weeks, shares of ResMed have exceeded the performance of the overall market. RMD has climbed 59.7%, significantly outperforming the broader S&P 500 Index ($SPX), which has had a 31% gain. In 2024, RMD stock surged 41.7%, in comparison to SPX’s 25.2% year-to-date increase.
When comparing performance in the healthcare sector, RMD stock has also outperformed the Health Care Select Sector SPDR Fund (XLV), which rose by 10.5% over the past 52 weeks and saw a 5.7% increase year-to-date.
ResMed’s shares jumped 7.1% following the release of its Q1 earnings on October 24, revealing a 34.1% year-over-year rise in adjusted EPS to $2.20, surpassing analyst expectations. The company reported revenue of $1.2 billion, which is an 11.1% increase from the prior year, driven by strong results in its Sleep and Breathing Health sector. Additionally, ResMed’s ongoing debt reduction efforts and a 324 basis-point improvement in adjusted gross margin added to investor confidence.
Looking ahead to the current fiscal year ending in June 2025, analysts anticipate a 20.2% year-over-year growth in EPS to $9.28. ResMed has demonstrated a consistent history of earnings surprises, beating consensus estimates in the past four quarters.
Among the 13 analysts monitoring the stock, the consensus rating is a “Moderate Buy,” based on six “Strong Buy” ratings, six “Holds,” and one “Strong Sell.”
This outlook reflects a slight improvement from three months ago when there were five “Strong Buy” ratings.
On October 25, KeyBanc elevated its price target for ResMed to $266 while maintaining an “Overweight” rating following the firm’s strong Q1 earnings report. The firm noted impressive performance in Devices despite ongoing GLP-1 concerns, as well as ResMed’s commitment to continue reducing debt, which increases its capital allocation flexibility.
Currently, RMD trades below the average price target of $251.70. The highest price target on the street stands at $283, suggesting a potential upside of 16.1% from its current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. More news from Barchart
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
