Resmed (RMD) AI Stock Analysis

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Resmed

(NYSE:RMD)

Rating:85Outperform

Price Target:―

Resmed's strong financial performance, supported by consistent revenue growth, high margins, and solid cash flows, is a major strength. Positive technical indicators suggest upward momentum, although overbought conditions could lead to short-term volatility. The valuation is fair, and the positive earnings call further highlights the company's stability and growth prospects. Overall, Resmed is well-positioned for continued success in the medical instruments and supplies industry.

Positive Factors

Financial Performance

The company experienced a 140 basis points gross margin expansion, reaching a level not seen since 2Q21, indicating strong financial performance.

Investor Confidence

Strong cash generation has allowed Resmed to extend its buyback program, increasing it to $100 million per quarter, which is a positive signal to investors.

Strategic Initiatives

Resmed is investing in US automated manufacturing to support local production, which could improve efficiency and reduce costs.

Negative Factors

Clinical Trials

The expected positive results from Apnimed's phase 3 trial create an overhang for RMD shares.

Competition

RMD is facing increasing competition from both neuromodulation devices and drugs.

Regulatory Challenges

RMD has yet to see an impact from the FDA approval of Eli Lilly's Zepbound for OSA.

Resmed (RMD) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$36.38B

Dividend Yield0.83%

Average Volume (3M)1.17M

Price to Earnings (P/E)27.9

Beta (1Y)1.08

Revenue Growth9.54%

EPS Growth37.23%

CountryUS

Employees9,980

SectorHealthcare

Sector Strength44

IndustryMedical - Instruments & Supplies

Share Statistics

EPS (TTM)2.37

Shares Outstanding146,627,400

10 Day Avg. Volume1,066,979

30 Day Avg. Volume1,165,656

Financial Highlights & Ratios

PEG Ratio5.22

Price to Book (P/B)6.48

Price to Sales (P/S)0.00

P/FCF Ratio22.97

Enterprise Value/Market Cap0.98

Enterprise Value/Revenue1.86

Enterprise Value/Gross Profit12.19

Enterprise Value/Ebitda5.40

Forecast

1Y Price Target

$265.11

Price Target Upside7.86% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering15

Resmed Business Overview & Revenue Model

Company DescriptionResMed Inc. (RMD) is a global leader in the development, manufacturing, and distribution of innovative solutions for people with sleep apnea, chronic obstructive pulmonary disease (COPD), and other chronic respiratory disorders. The company operates primarily in the healthcare sector, providing cloud-connected devices and healthcare informatics solutions designed to improve patient outcomes and reduce healthcare costs. ResMed's core products include continuous positive airway pressure (CPAP) devices, ventilators, and a range of accessories, along with software solutions that facilitate remote monitoring and management of patients.

How the Company Makes MoneyResMed generates revenue through the sale of its medical devices and related accessories, primarily targeting patients suffering from sleep apnea and other chronic respiratory conditions. A significant portion of its income is derived from its comprehensive range of CPAP machines and masks, which are sold to healthcare providers, distributors, and direct-to-consumer channels. Additionally, ResMed capitalizes on its digital health platform, which offers cloud-connected solutions for monitoring patients remotely, thereby generating recurring revenue through software subscriptions and data services. The company's strategic partnerships with healthcare providers and institutions further bolster its revenue streams by expanding its market reach and ensuring a steady demand for its products and services. Factors such as global aging populations and increasing awareness of sleep-related health issues also contribute significantly to ResMed's financial performance.

Resmed Key Performance Indicators (KPIs)

Any

Sleep and Breathing Health Products Revenue by Segment

Sleep and Breathing Health Products Revenue by Segment
Highlights revenue from different segments within sleep and breathing health products, indicating which areas drive growth and where the company might expand its market presence.

Chart InsightsResMed's revenue from both devices and masks has shown consistent growth, with recent earnings highlighting a 10% global increase. The AirSense platforms are driving device sales, while masks and accessories also enjoy double-digit growth. The company's strategic focus on innovation and efficiency is evident in the 230 basis point margin expansion. Despite currency impacts, ResMed's strong market performance and collaborations, such as with Apple, position it well for future growth, particularly as it navigates emerging trends in pharmaceuticals and wearables.

Data provided by:

Main Street Data

Resmed Financial Statement Overview

Summary

Resmed demonstrates strong financial performance with consistent revenue growth, high profitability margins, and robust cash flows. The balance sheet is stable with low leverage, although liabilities have increased. Overall, Resmed is well-positioned for growth and stability.

Income Statement

Very Positive

Resmed demonstrates strong financial performance with consistent revenue growth, evidenced by a 7.18% revenue growth rate in the TTM compared to the previous year. The company maintains high profitability margins, including a gross profit margin of 58.52% and a net profit margin of 26.14% for the TTM. These figures reflect operational efficiency and effective cost management.

Balance Sheet

Very Positive

Resmed's balance sheet is robust, featuring a low debt-to-equity ratio of 0.15 and a high equity ratio of 73.31% in the TTM. These indicators suggest financial stability and a strong equity base. The return on equity stands at 23.68%, indicating efficient use of shareholder funds. However, the company should monitor its total liabilities, which have increased over the years.

Cash Flow

Very Positive

Resmed has a strong cash flow position, with a significant 21.84% growth in free cash flow in the TTM. The operating cash flow to net income ratio is 1.26, indicating healthy cash generation relative to net income. The free cash flow to net income ratio is also strong at 1.19, reinforcing the company's ability to generate cash from operations effectively.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
5.02B	4.69B	4.22B	3.58B	3.20B	2.96B
	Gross Profit
2.94B	2.66B	2.36B	2.02B	1.84B	1.72B
	EBIT
1.61B	1.32B	1.13B	1.00B	903.68M	809.66M
	EBITDA
1.71B	1.53B	1.36B	1.18B	1.10B	990.43M
	Net Income Common Stockholders
1.31B	1.02B	897.56M	779.44M	474.50M	621.67M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
932.71M	238.36M	227.89M	273.71M	295.28M	463.16M
	Total Assets
7.57B	6.87B	6.75B	5.10B	4.73B	4.59B
	Total Debt
839.77M	873.93M	1.58B	917.55M	793.72M	1.30B
	Net Debt
-92.94M	635.57M	1.35B	643.84M	498.44M	836.11M
	Total Liabilities
2.02B	2.01B	2.62B	1.74B	1.84B	2.09B
	Stockholders Equity
5.55B	4.86B	4.13B	3.36B	2.89B	2.50B
Cash Flow		Free Cash Flow
1.56B	1.29B	559.30M	195.11M	619.89M	696.32M
	Operating Cash Flow
1.65B	1.40B	693.30M	351.15M	736.72M	802.25M
	Investing Cash Flow
-112.84M	-269.78M	-1.16B	-229.92M	-158.46M	-179.86M
	Financing Cash Flow
-835.65M	-1.12B	422.87M	-128.36M	-764.63M	-317.29M

Resmed Technical Analysis

Technical Analysis Sentiment

Positive

Last Price245.78

Price Trends

50DMA

227.24

Positive

100DMA

231.47

Positive

200DMA

234.64

Positive

Market Momentum

MACD

6.79

Negative

RSI

60.36

Neutral

STOCH

60.35

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RMD, the sentiment is Positive. The current price of 245.78 is above the 20-day moving average (MA) of 242.85, above the 50-day MA of 227.24, and above the 200-day MA of 234.64, indicating a bullish trend. The MACD of 6.79 indicates Negative momentum. The RSI at 60.36 is Neutral, neither overbought nor oversold. The STOCH value of 60.35 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RMD.

Resmed Risk Analysis

Resmed disclosed 35 risk factors in its most recent earnings report. Resmed reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Resmed Peers Comparison

Overall Rating

UnderperformOutperform

Sector (53)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RMD	85 Outperform	$36.38B	27.86	25.81%	0.83%	9.54%	37.23%
COO	68 Neutral	$16.30B	38.38	5.25%	―	7.15%	41.96%
BDX	68 Neutral	$50.63B	33.71	5.97%	2.25%	5.84%	15.12%
HOLX	66 Neutral	$12.58B	23.15	11.77%	―	1.66%	21.95%
MASI	58 Neutral	$8.47B	116.65	-23.93%	―	-0.12%	-713.82%
BAX	57 Neutral	$16.15B	136.07	-8.96%	2.92%	-20.17%	-138.32%
Sector *	53 Neutral	$5.24B	3.07	-43.58%	2.80%	16.87%	-0.11%

* Healthcare Sector Average

Performance Comparison

RMD

Resmed

245.78

36.09

17.21%

BAX

Baxter International

30.43

-2.69

-8.12%

BDX

Becton Dickinson

173.14

-53.25

-23.52%

COO

Cooper Co

79.37

-15.07

-15.96%

HOLX

Hologic

54.82

-19.17

-25.91%

MASI

Masimo

149.39

24.64

19.75%

Resmed Earnings Call Summary

Earnings Call Date:Apr 23, 2025

(Q3-2025)

% Change Since: 14.86%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong revenue growth, gross margin expansion, successful product launches, and increased share buybacks. Despite challenges such as sleep lab backlogs and foreign currency impacts, ResMed demonstrated resilience with strategic expansions and maintaining tariff exemptions.

Q3-2025 Updates

Positive Updates

Strong Revenue Growth

Group revenue for Q3 FY2025 was $1.29 billion, an 8% headline increase and 9% in constant currency terms. Device sales increased by 7% globally, while masks and other sales increased by 12% in constant currency.

Gross Margin Expansion

Gross margin increased by 140 basis points to 59.9% in the March quarter, driven by manufacturing and logistics efficiencies and favorable product mix shifts.

Successful Launch of New Products

The first full commercial rollout of Nite Owl and the launch of AirSense 11 version of VPAP Tx contributed to new technology introductions to customers in Q3.

Recognition for Innovation

ResMed was named in the Lexus Nexus list of the top 100 global innovators, showcasing the company's market-leading efforts in pioneering innovation.

Strong Cash Flow and Net Income

Cash flow from operations was $579 million, and net income for the March quarter increased by 11%, with non-GAAP diluted earnings per share of $2.37, also increasing by 11%.

Expansion of Manufacturing Facilities

ResMed is opening a new advanced manufacturing facility in Calabasas, California, which will almost double its manufacturing footprint in the US.

Increased Share Buyback Program

ResMed plans to increase its ongoing share buyback program to purchase shares to the value of approximately $100 million per quarter starting in Q4 FY2025.

Tariff Exemptions Maintained

ResMed confirmed that it will continue to benefit from tariff exemptions on its products imported into the US, mitigating potential impacts from new tariffs.

Negative Updates

Ongoing Sleep Lab Backlogs

There is a significant backlog of patients in sleep labs, which has been a challenge in diagnosing and treating new patients efficiently.

Foreign Currency Impact

Year-over-year movements in foreign currencies negatively impacted revenue by approximately $13 million during the March quarter.

Company Guidance

During the Q3 Fiscal Year 2025 earnings call, ResMed reported strong financial performance, highlighting several key metrics. The company achieved a revenue of $1.29 billion, marking an 8% increase year-over-year, or 9% in constant currency terms. Gross margin expanded by 140 basis points to 59.9%, driven by manufacturing and logistics efficiencies and favorable product mix shifts. Sales in the US, Canada, and Latin America increased by 9%, while sales in Europe, Asia, and other regions grew by 8% on a constant currency basis. ResMed's SG&A expenses improved slightly as a percentage of revenue to 19%, while R&D expenses were 6.5% of revenue. The company generated strong free cash flow of $579 million, including a tax refund, and ended the quarter with a cash balance of $933 million. ResMed plans to increase its share buyback program to $100 million per quarter, reflecting confidence in its financial position despite ongoing global uncertainties.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.