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California-based ResMed Inc. (RMD), with a market cap of $33.3 billion, operates in the healthcare sector, specializing in sleep and respiratory care solutions. The company designs, manufactures, and distributes medical devices and cloud-based software applications for treating sleep-disordered breathing and other respiratory conditions.
Shares of this medical equipment maker have significantly outperformed the broader market over the past 52 weeks. RMD stock has notably surged 40.3% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 27.5%. In 2024, shares of RMD are up 31.3%, compared to SPX's 17.8% gain on a YTD basis.
Looking closer, RMD has also outpaced the S&P Healthcare Equipment SPDR's (XHE) 3.7% returns over the past 52 weeks and a 4.9% YTD gain.
ResMed has outperformed due to its strong market share in sleep apnea treatments and high post-tax margins. Additionally, its recovery in free cash flow and minimal reinvestment needs have bolstered its competitive edge, despite challenges like competition from GLP-1 drugs and the Philips CPAP recall.
Moreover, the stock surged 4.2% following its Q4 earnings release on Aug. 1 because the company reported revenue of $1.22 billion and an adjusted profit of $2.08 per share, both exceeding estimates. This positive financial performance, combined with continued robust demand for its sleep apnea devices, boosted investor confidence.
For the current fiscal year, ending in June 2025, analysts expect RMD's EPS to grow nearly 14% year over year to $8.80. The company's earnings surprise history is promising. It beat the consensus estimates in all of the last four quarters.
Among the 12 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on five “Strong Buy” ratings, one “Moderate Buy,” and six “Holds.”
The configuration is less bullish than three months ago, with eight analysts suggesting a “Strong Buy.”
On Aug. 2, KeyBanc analyst Brett Fishbin raised ResMed's price target to $251 - Street-high price target and maintained an “Overweight” rating, citing improved gross margin expectations for Q4 and FY25. This implies a modest potential upside of 11.1%.
The mean price target of $228.50 represents a premium of roughly 1.2% to RMD's 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.
