RBC Capital Markets has adjusted its price target for ResMed (NYSE: RMD), a company specializing in medical equipment for treating sleep disorders, raising it to $224.00 from the previous $206.00.
The firm has decided to maintain a "Sector Perform" rating on the stock.
The adjustment follows ResMed's recent investor day, where the company presented a revenue and earnings forecast up to 2030 that surpassed expectations.
The positive outlook is attributed to several factors, including advancements in artificial intelligence and machine learning, initiatives to stimulate demand, higher resupply rates, and plans to venture into new markets.
Despite the optimistic long-term forecast, RBC Capital notes that ResMed's recent performance has been aided by a competitor's product recall. Philips, a key competitor, had issued a recall that temporarily benefited ResMed.
RBC Capital anticipates that Philips' re-entry into the market may curb ResMed's revenue growth. Nevertheless, the firm has moderated its previous assumptions regarding this impact.
In other recent news, ResMed, a specialist in sleep apnea treatments and software solutions, 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 also reduced its debt by $300 million and repurchased 232,000 shares for $50 million. Despite these positive financial results, ResMed maintained its Hold rating from major investment firms such as Oppenheimer and Needham, who cited potential challenges in the sleep apnea market due to the rise of GLP-1 therapies.
On the other hand, Mizuho Securities and Baird reaffirmed their Outperform ratings, with Mizuho even raising its price target. 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.
The company's management remains confident in achieving sustained high-single digit revenue growth, backed by demand generation strategies and market share gains. ResMed plans to grow its portfolio through strategic acquisitions, focusing on technology-driven and residential care software solutions.
InvestingPro Insights
ResMed's recent investor day optimism is reflected in its strong financial performance and market position. According to InvestingPro data, the company boasts a market capitalization of $35.87 billion and has demonstrated impressive revenue growth of 10.95% over the last twelve months. This growth aligns with the company's positive long-term forecast discussed in the investor day presentation.
InvestingPro Tips highlight ResMed's financial strength and consistent performance. The company has maintained dividend payments for 13 consecutive years and has raised its dividend for 12 consecutive years, showcasing its commitment to shareholder returns. This consistent dividend policy may be particularly attractive to investors seeking stable income in the medical equipment sector.
Moreover, ResMed's strong recent performance is evident in its 66.81% price total return over the past year, and a robust 30.9% return in the last three months. These figures support RBC Capital's decision to raise the price target, although the current stock price of $244.12 is already near its 52-week high, trading at 95.67% of that level.
For investors considering ResMed, it's worth noting that InvestingPro offers 16 additional tips for a more comprehensive analysis of the company's prospects. These insights could provide valuable context for understanding ResMed's position in the competitive medical equipment market and its potential for continued growth.
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