Piper Sandler has revised its price target for ResMed (RMD, Financial), reducing it from $260 to $248 while maintaining a Neutral stance on the stock. This adjustment follows the company's Q3 financial report, which met market expectations on revenue but slightly underperformed on earnings.
ResMed reported $1.29 billion in revenue for the third quarter, aligning with Wall Street estimates. The company's performance was bolstered by robust sales in Masks & Other, which achieved $454 million compared to the expected $449 million. However, this was tempered by weaker performance in the Devices segment.
The adjusted earnings per share (EPS) came in at $2.37, missing the consensus forecast by one cent. Despite this minor shortfall, the firm experienced significant gross margin improvements due to effective efficiency strategies. Additionally, ResMed provided reassuring commentary regarding limited impacts from tariffs, which suggests stability in future operations.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 13 analysts, the average target price for ResMed Inc (RMD, Financial) is $263.49 with a high estimate of $295.00 and a low estimate of $195.00. The average target implies an upside of 22.87% from the current price of $214.44. More detailed estimate data can be found on the ResMed Inc (RMD) Forecast page.
Based on the consensus recommendation from 19 brokerage firms, ResMed Inc's (RMD, Financial) average brokerage recommendation is currently 2.3, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for ResMed Inc (RMD, Financial) in one year is $287.86, suggesting a upside of 34.24% from the current price of $214.44. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the ResMed Inc (RMD) Summary page.
RMD Key Business Developments
Release Date: April 23, 2025
- Revenue: $1.29 billion, an 8% increase year-over-year, 9% in constant currency terms.
- Gross Margin: Increased by 140 basis points to 59.9%.
- Net Income: Increased by 11% for the quarter.
- Diluted Earnings Per Share (EPS): $2.37, an 11% increase; $2.41 excluding investment portfolio write-downs, a 13% increase.
- Operating Cash Flow: $579 million, including a $107 million tax refund; $472 million excluding the tax refund.
- Cash Balance: $933 million at the end of the quarter.
- Net Cash Position: $258 million.
- Dividend: Declared a quarterly dividend of $0.53 per share.
- Share Buyback: Purchased approximately 314,000 shares for $75 million; plans to increase buyback to $100 million per quarter starting Q4 FY25.
- SG&A Expenses: Increased by 7% on a headline basis, 8% in constant currency; 19% of revenue.
- R&D Expenses: Increased by 9% on a headline basis, 11% in constant currency; 6.5% of revenue.
- Free Cash Flow: Strong generation reported.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ResMed Inc (RMD, Financial) reported strong financial performance with an 8% increase in group revenue, reaching $1.29 billion for Q3 fiscal year 2025.
- The company achieved gross margin expansion, increasing by 140 basis points to 59.9%, driven by manufacturing and logistics efficiencies.
- ResMed Inc (RMD) maintained a disciplined approach to investments, allocating 6% to 7% of revenues into research and development, which is a key growth driver.
- The company is expanding its manufacturing footprint in the US with a new facility in Calabasas, California, which will double its current manufacturing capacity.
- ResMed Inc (RMD) continues to innovate with the launch of new products like NightOwl and VPAP Tx, enhancing its digital health ecosystem and expanding its market reach.
Negative Points
- ResMed Inc (RMD) faces challenges with sleep lab backlogs, which are at all-time highs, potentially impacting the speed of patient diagnosis and treatment.
- The company is navigating a complex global trade environment, particularly concerning tariffs, although it has secured exemptions for its products.
- There is uncertainty in the market due to geopolitical challenges and potential impacts from US tariffs, which could affect financial results.
- ResMed Inc (RMD) is investing heavily in demand generation and brand development, which requires careful management to ensure a positive return on investment.
- The company faces competition in the market, particularly from other diagnostic and treatment providers, which could impact its market share and growth.
