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ResMed Inc RMD

Morningstar Rating
$173.96 −7.03 (3.88%)
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Company Report

ResMed Earnings: Strong Device Sales and Cost Control Boost Earnings

We maintain our USD 258 fair value estimate for narrow-moat ResMed, or AUD 39 per CDI at current exchange rates, following second-quarter fiscal 2024 results. Despite significant market pessimism given the growing prevalence of GLP-1 drugs for weight loss, underlying EBIT grew 15% to USD 366 million sequentially on first-quarter fiscal 2024, with sales up 5% and the underlying EBIT margin expanding roughly 250 basis points to 31%. Our long-term estimates are broadly unchanged, but we increase our fiscal 2024 underlying EBIT forecast by 2% to USD 1.4 billion. This was largely due to expenses tracking slightly below our expectations, as well as strong performances in ResMed’s software-as-a-service business and device sales outside the Americas, up 16% in constant currency on the previous corresponding period.

Price vs Fair Value

RMD is trading at a 33% discount.
Price
$173.96
Fair Value
$567.00
Uncertainty
Medium
1-Star Price
$541.40
5-Star Price
$964.60
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

The long-term growth opportunity for respiratory homecare devices is sizable as both developed and emerging markets are still significantly underpenetrated.

Bears

Market share gains from Philips’ product recall may be limited as affected customers can wait for a replacement unit, purchase an alternative Philips product, and ResMed’s supply chain may be constrained.

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News

Trading Information

Previous Close Price
$180.99
Day Range
$171.99181.16
52-Week Range
$132.24243.52
Bid/Ask
$173.75 / $176.28
Market Cap
$25.59 Bil
Volume/Avg
1.4 Mil / 870,882

Key Statistics

Price/Earnings (Normalized)
25.58
Price/Sales
5.70
Dividend Yield (Trailing)
1.08%
Dividend Yield (Forward)
1.10%
Total Yield
1.10%

Company Profile

ResMed is one of the largest respiratory care device companies globally, primarily developing and supplying flow generators, masks and accessories for the treatment of sleep apnea. Increasing diagnosis of sleep apnea combined with ageing populations and increasing prevalence of obesity is resulting in a structurally growing market. The company earns roughly two thirds of its revenue in the Americas and the balance across other regions dominated by Europe, Japan and Australia. Recent developments and acquisitions have focused on digital health as ResMed is aiming to differentiate itself through the provision of clinical data for use by the patient, medical care advisor and payer in the out-of-hospital setting.
Sector
Healthcare
Industry
Medical Instruments & Supplies
Stock Style Box
Mid Growth
Total Number of Employees
10,140

Competitors

Valuation

Metric
RMD
PHIA
FPH
Price/Earnings (Normalized)
25.5815.0354.67
Price/Book Value
5.711.408.34
Price/Sales
5.700.988.58
Price/Cash Flow
21.2220.5037.33
Price/Earnings
RMD
PHIA
FPH

Financial Strength

Metric
RMD
PHIA
FPH
Quick Ratio
1.230.741.06
Current Ratio
3.111.202.54
Interest Coverage
19.71−0.8725.77
Quick Ratio
RMD
PHIA
FPH

Profitability

Metric
RMD
PHIA
FPH
Return on Assets (Normalized)
14.83%3.84%12.48%
Return on Equity (Normalized)
24.40%9.21%16.75%
Return on Invested Capital (Normalized)
18.31%6.73%15.46%
Return on Assets
RMD
PHIA
FPH
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