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Is ResMed Stock Outperforming the Dow?

Is ResMed Stock Outperforming the Dow?

  • 20.03.2025 18:39
  • msn.com
  • Keywords: DANGER

ResMed stock, a large-cap medical device company, has underperformed the Dow in recent months despite long-term gains of 15%. Concerns over Medicare coverage and competition from GLP-1 therapies have weighed on shares, though ResMed still outperforms rival Intuitive Surgical. Analysts remain cautiously optimistic with a "Moderate Buy" rating.

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Estimated market influence

ResMed Inc.

ResMed Inc.

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Analyst rating: Buy

Stock price decline despite strong EPS growth and revenue.

Context

Analysis: ResMed Stock Performance and Market Implications

Overview

  • ResMed Inc. (RMD) is a $10+ billion "large-cap" company specializing in medical devices and cloud-based software for sleep-disordered breathing (SDB) and respiratory conditions.
  • The company operates in two segments:
    • Sleep and Respiratory Care
    • Software-as-a-Service (SaaS)

Stock Performance

  • Short-Term:
    • RMD shares are trading 15.6% below their [X] level.
    • Over the past three months, RMD has declined more steeply than the Dow Jones Industrials Average (DOWI).
  • Long-Term:
    • YTD, RMD is down 2.9%, compared to DOWI’s 1.4% decline.
    • Over the past 52 weeks, RMD has increased 15%, outperforming the broader market.

Financial Highlights

  • Q4 FY23:
    • Adjusted EPS: $2.43
    • Revenue: $1.3 billion
  • Despite strong financial results, shares fell 8.3% post-earnings due to concerns over:
    • FDA approval of GLP-1 therapies for obstructive sleep apnea (OSA).
    • Potential reduction in demand for ResMed’s core CPAP devices.

Risks and Challenges

  • Macroeconomic Factors:
    • Geopolitical tensions.
    • Rising freight costs.
  • Valuation Concerns:
    • Market worries about high valuations impacting future performance.
  • Segment Underperformance:
    • Some segments underperformed expectations, weighing on stock sentiment.

Competitive Landscape

  • ResMed has outperformed rival Intuitive Surgical (ISRG):
    • RMD: 15% YTD increase vs. ISRG’s 5.7% decline.
    • Analysts view ResMed as a more stable investment compared to ISRG.

Analyst Sentiment

  • Consensus rating: "Moderate Buy" from 16 analysts covering the stock.
  • Despite cautious optimism, RMD is trading below [X] as of the latest data.

Strategic Considerations

  • ResMed’s diversified portfolio and strong cloud-based software solutions position it as a leader in its sector.
  • Long-term growth opportunities remain in:
    • Expanding adoption of sleep apnea treatments.
    • Growth in connected care and SaaS platforms.

Market Implications

  • Short-Term Volatility:
    • Risks related to GLP-1 therapies and macroeconomic factors may continue to pressure RMD shares.
  • Long-Term Outlook:
    • ResMed’s ability to adapt to market shifts and innovate will determine its sustained growth.