RBC downgrades ResMed to Sector Perform amid GLP-1 drug fears

RBC Capital downgraded ResMed to Sector Perform from Outperform with a price target of $202, down from $273. The analyst expects GLP-1 drugs to have only a modest impact on ResMed’s business, and therefore believes the stock offers “long-term valuation appeal.” However, recent channel checks suggest the re-PAP backlog has now been largely addressed, which means ResMed’s device revenues are most likely to decline between fiscal 2024 and 2026 as Philips re-enters the new-patient market, the analyst tells investors in a research note. RBC cites minimal earnings growth expected over the next few years, financials that are likely to disappoint consensus numbers and GLP-1 fears that are unlikely to be countered in the short term for the downgrade.