ResMed Earnings: Solid Sales Outside Americas and EBIT Margin Expansion

Shares in narrow-moat ResMed remain undervalued following a solid first-quarter fiscal 2025. Underlying EBIT of USD 406 million was 1% higher than fourth-quarter fiscal 2024, with sales slightly up on increased product demand and underlying EBIT margin up a strong 45 basis points to 33%. SG&A expense was a highlight, decreasing by 28 basis points sequentially to 20% of revenue. First-quarter revenue and earnings met our forecasts, and we leave our long-term estimates largely unchanged. Our forecast five-year revenue and EBIT compound annual growth rates are 8% and 10%, respectively, broadly consistent with ResMed’s five-year guidance for high-single-digit revenue growth and higher earnings growth. We raise our fair value estimate by 2% to USD 270, or AUD 40.50 per CDI at current exchange rates, largely due to the time value of money.