Growth stock and sleep-apnea device maker ResMed broke out Friday after quarterly earnings continued to accelerate. Shares surged above an entry at 227.94 from a cup with handle in strong volume and are in a buy zone, according to IBD MarketSmith.
The IBD 50 growth stock has a perfect 99 Composite Rating and solid 85 Relative Strength Rating. The stock also boasts an outstanding 94 EPS Rating.
Sales have grown steadily over the past eight quarters.
In Q1 2023, revenue grew 29% year over year to $1.1 billion while earnings grew 27% to $1.68 per share. ResMed worked through its U.S. backlog during the quarter as supply-chain pressures eased.
According to CEO Mick Farrell, stronger production and delivery of "cloud-connected flow generator devices resulted in strong device sales growth across global markets."
Sleep-Apnea Device Maker Leads Strong Industry Group
ResMed ranks second in the medical products group, which holds a lofty eighth place among IBD's 197 industry groups.
The San Diego company makes medical devices and software for out-of-hospital care conditions. These include sleep apnea, chronic obstructive pulmonary disease (COPD) and other chronic diseases.
ResMed is the world's largest continuous positive airway pressure (CPAP) device maker; it operates in over 120 countries. This device pushes air into the lungs using a noninvasive mechanical ventilation approach.
Its cloud platform offers noninvasive treatment of sleep and breathing disorders at home and in hospitals globally.
Growth Stock Enters Second-Largest Health Care Market
ResMed also offers automation tools through its portfolio.
The Brightree division provides health medical equipment, pharmacy documentation and inventory management. Its MatrixCare services offer software for long-term and at-home care, while the software-as-a-service platform features analytics and collaboration tools.
ResMed has made recent acquisitions, improving access to Germany. According to CEO Farrell, this is the second-largest health care market in per capita spending.
ResMed bought Mementor in August, venturing into Germany's health care market with the acquisition of a digital product for insomnia called Somnio. The application improves sleep in patients diagnosed with insomnia. Somnio is the only permanently approved digital-health application for sleep in Germany.
In November, it bought German-based Medifox Dan for $997.5 million, adding an assortment of tools for out-of-hospital patient care.
RMD stock's B+ Accumulation/Distribution Rating indicates strong interest from mutual fund managers. These funds own 43% of outstanding shares of the growth stock.
Exchange traded funds also hold shares, including The First Trust Nasdaq Lux Digital Health Solutions ETF and the Fidelity Digital Health ETF.
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