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ResMed Inc RMD Stock Quote

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Morningstar‘s Stock Analysis RMD

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Supply Constraints in International Markets Overshadow ResMed’s Strong U.S. Performance

Shane Ponraj, CFA Equity Analyst

Analyst Note

| Shane Ponraj, CFA |

Narrow-moat ResMed’s first-quarter fiscal 2023 underlying EBIT rose a moderate 4% to USD 291 million on the previous corresponding period, or pcp. While its redesigned AirSense 10 Card-to-Cloud device drove 18% U.S. revenue growth on pcp, sales in international markets fell 16% on pcp, or 6% in constant currency. This was largely due to major markets such as France and Japan having a strong preference for 100% cloud-connectable devices given its digital health reimbursement models. Here, ResMed is still facing ongoing supply constraints in accessing sufficient device components, which is limiting new patient starts and negatively affecting mask sales as well as devices. Although we think this is simply creating pent-up demand and remain positive on supply constraints eventually easing, we reduce our fair value by 4% to USD 245 per share, or AUD 38 per CDI at current exchange rates, largely driven by the weaker euro relative to the U.S. dollar. We forecast a five-year 11% revenue CAGR, down from 12% prior, and an unchanged midcycle 35% EBIT margin.

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Company Profile RMD

Business Description

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.

9001 Spectrum Center Boulevard
San Diego, CA, 92123
T +1 858 836-5000
Industry Medical Instruments & Supplies
Most Recent Earnings Sep 30, 2022
Fiscal Year End Jun 30, 2023
Employees 8,160