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With a market cap of $35.8 billion, ResMed Inc. (RMD) is a global leader in the design, manufacturing, and distribution of medical devices and cloud-based software for the treatment of sleep-disordered breathing (SDB) and other respiratory conditions. It operates through two segments: Sleep and Respiratory Care, and Software-as-a-Service, offering innovative products and solutions for respiratory health and patient management.
Shares of the medical products maker have outperformed the broader market over the past 52 weeks. RMD has climbed 59.7% over this time frame, while the broader S&P 500 Index ($SPX) has gained 31%. In 2024, RMD stock surged 41.7%, compared to SPX's 25.2% YTD gain.
Looking closer, RMD stock has also outpaced the Health Care Select Sector SPDR Fund's (XLV) 10.5% rise over the past 52 weeks and a 5.7% increase on a YTD basis.
Shares of ResMed surged 7.1% following its Q1 earnings release on Oct. 24 due to a 34.1% year-over-year increase in adjusted EPS to $2.20, which exceeded analyst expectations. The company's revenue of $1.2 billion, an 11.1% increase from the previous year, also topped estimates, driven by strong performance in its Sleep and Breathing Health segment. Additionally, ResMed's continued debt reduction and improved margin performance, with a 324 basis-point expansion in adjusted gross margin, further fueled investor optimism.
For the current fiscal year, ending in June 2025, analysts expect RMD's EPS to grow 20.2% year-over-year to $9.28. The company's earnings surprise history is promising. It beat the consensus estimates in the last four quarters.
Among the 13 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on six “Strong Buy” ratings, six “Holds,” and one “Strong Sell.”
This configuration is slightly more bullish than three months ago, with five “Strong Buy” ratings on the stock.
On Oct. 25, KeyBanc raised its price target for ResMed to $266 and maintained an “Overweight” rating following the company’s Q1 earnings report. The firm highlighted strong performance in Devices despite GLP-1 concerns and noted ResMed's continued debt reduction, enhancing its capital allocation flexibility.
As of writing, RMD is trading below the mean price target of $251.70. The Street-high price target of $283, implies a modest potential upside of 16.1% from the current price levels.
