California-based Resmed (RMD) makes medical equipment and devices for the treatment of sleep apnea. It sells its products around the world. Resmed recently introduced a new sleep apnea device called AirSense 11, which it is initially rolling out in the U.S.
Let’s take a look at Resmed’s latest financial performance and risk factors.
Resmed’s Fiscal Q4 and 2021 Financial Results
The company reported a 14% year-over-year increase in revenue to $876.1 million for its Fiscal 2021 fourth-quarter ended June 30. That beat consensus estimates of $783.18 million. Adjusted EPS of $1.35 increased from $1.33 a year ago and beat consensus estimates of $1.28.
For Fiscal 2021, revenue rose 8% to $3.2 billion. Adjusted EPS for the year was $5.33, compared to $4.76 in the previous year.
Resmed plans to distribute a quarterly cash dividend of $0.42 per share on September 23. The dividend represents an increase of 8% over last year’s amount. (See ResMed stock charts on TipRanks).
Resmed CEO Mick Farrell said they are confident in their ability to continue driving growth through Fiscal 2022. The executive further said they are accelerating the ResMed 2025 strategy.
The company’s growth strategy includes acquiring complementary businesses. It has completed several acquisitions in recent years, including the purchase of Propeller Health in 2019 and MatrixCare in 2018.
Resmed’s Risk Factors
The new TipRanks Risk Factors tool reveals 34 risk factors for Resmed. The company introduced one new risk factor in its Fiscal 2021 annual report.
The newly added risk falls under the Finance and Corporate category and relates to acquisitions. Resmed says it acquires businesses to enhance its innovation in product development. It says the success of those acquisitions depends on the successful integration of the acquired operations. It further says that management’s attention may be diverted while attempting to integrate the acquisitions. Resmed cautions that failing to successfully integrate the businesses may prevent it from achieving the intended benefits of the acquisitions.
While introducing a new Finance and Corporate risk factor, Resmed dropped one Legal and Regulatory risk factor from its latest annual report. The company previously cautioned investors that they may not be able to enforce the rulings of U.S. courts against its officers and directors or assets. While outlining that risk, Resmed said that some of its executives reside outside the U.S. together with a large portion of its assets.
Legal and Regulatory is Resmed’s top risk category, accounting for 32% of the total risks. That is above the sector average at 20%. Resmed’s shares have gained about 32% since the beginning of 2021.
Analysts’ Take
Following Resmed’s Fiscal 2021 Q4 and full-year report, Bank of America Securities analyst Lyanne Harrison reiterated a Sell on Resmed stock and lowered the price target to $234 from $236. Harrison’s new price target suggests 16.30% downside potential.
Consensus among analysts is a Hold based on 1 Buy, 6 Holds, and 3 Sells. The average Resmed price target of $219.50 implies 21.49% downside potential to current levels.
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