Tuesday, Mizuho reiterated its Outperform rating and $250.00 price target on ResMed (NYSE:RMD) shares, a company specializing in products for the treatment of sleep disorders such as obstructive sleep apnea (OSA). The firm's stance comes in the wake of ResMed's Investor Day, where it presented its 2030 Plan, which includes a series of strategic initiatives aimed at driving growth.
ResMed's 2030 Plan highlights four key areas: leveraging diagnostic benefits from partnerships with Samsung (KS:005930) Galaxy and Apple (NASDAQ:AAPL) wearables, potential label expansion of Eli Lilly (NYSE:LLY)'s Zepbound later in the year, ongoing evaluation of OSA solutions by Nyxoah and Apnimed, and expansion into related markets, including insomnia treatments.
The long-range plan (LRP) anticipates high single-digit (HSD) revenue growth and earnings per share (EPS) leverage that would result in low double-digit (low-DD) bottom line growth.
The analyst from Mizuho expressed confidence in the plan, suggesting that the recent decline in ResMed's stock price presents an attractive opportunity for investors. The firm has adjusted its future earnings estimates for ResMed to reflect the anticipated impact of the 2030 Plan.
ResMed's strategic focus on expanding its product offerings and leveraging technological advancements in the wearable space reflects the company's commitment to innovation and market leadership in sleep-related healthcare solutions. The potential expansion of Zepbound's label, a treatment under Eli Lilly, later this year is also expected to have a positive impact on the company's growth trajectory.
The analyst's outlook underscores a belief that ResMed's comprehensive approach to addressing sleep disorders, including its expansion into the insomnia market, positions the company for sustained long-term growth. The 2030 Plan is designed to capitalize on the evolving healthcare landscape and the increasing prevalence of sleep disorders globally.
In other recent news, ResMed has seen a flurry of activity from various analyst firms. Baird has maintained an Outperform rating on ResMed, citing the company's growth potential in the sleep market and its strategic use of technologies. Concurrently, RBC Capital has raised its price target for ResMed based on the company's robust forecast up to 2030, driven by advancements in artificial intelligence, higher resupply rates, and plans to venture into new markets.
ResMed has also reported a 9% increase in group revenue for the fourth quarter of fiscal year 2024, reaching $1.22 billion, primarily driven by strong mask sales in the United States. The company managed to reduce its debt by $300 million and repurchased 232,000 shares for $50 million. Despite these positive financial results, Oppenheimer and Needham maintained a Hold rating on ResMed, citing potential challenges in the sleep apnea market due to the rise of GLP-1 therapies.
Baird reaffirmed Outperform rating. However, Wolfe Research downgraded ResMed to Underperform, pointing to potential market disruption. These recent developments reflect the diverse perspectives of analysts on ResMed's financial performance and market dynamics.
InvestingPro Insights
ResMed's strategic 2030 Plan aligns well with its current financial performance and market position. According to InvestingPro data, ResMed has demonstrated strong revenue growth, with a 10.95% increase in the last twelve months as of Q4 2024. This growth trajectory supports the company's high single-digit revenue growth target outlined in its long-range plan.
The company's financial health is further underscored by its robust profitability metrics. ResMed boasts a gross profit margin of 57.38% and an operating income margin of 29.54% for the same period, indicating efficient operations and strong pricing power in its market segments.
InvestingPro Tips highlight that ResMed has raised its dividend for 12 consecutive years, with a significant dividend growth of 20.45% in the last twelve months. This consistent dividend increase, coupled with the company's ability to maintain dividend payments for 13 consecutive years, reflects management's confidence in ResMed's long-term financial stability and growth prospects.
Moreover, ResMed's stock has shown impressive performance, with a one-year price total return of 60.11% as of the latest data. This aligns with the Mizuho analyst's view that the recent stock price decline may present an attractive entry point for investors.
For those interested in a deeper analysis, InvestingPro offers 13 additional tips for ResMed, providing a comprehensive view of the company's financial health and market position.
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