ResMed (RMD) Rides High On Robust Global Growth & Innovation

On Mar 2, 2018, we issued an updated research report on ResMed Inc. (NYSE:RMD) . The stock carries a Zacks Rank #3 (Hold).

The company achieved strong global revenue growth over the past few quarters on the back of robust sales of sleep devices, respiratory care devices, mask systems and software solutions. Also, Brightree has acted as a significant contributor to ResMed’s operating results through 2017.

We expect the company’s product launches and strategies to gain traction in the sleep-disordered breathing market and further boost its near-term performance. Among the recent developments, ResMed has already informed about its first self-branded portable oxygen concentrator, Mobi, subject to launch in third-quarter fiscal 2018. Further, it has introduced AirMini, the world's smallest PAP (positive airway pressure) device.

Significantly, the leading medical devices company continues to invest resources and expand footprint in high-growth markets like China, South Korea, India, Brazil and many countries in the Eastern Europe. Interestingly, in each region, the company implements long-term strategies to improve the quality of patient life for delivering better-patient outcomes and reducing overall system healthcare costs. In second-quarter fiscal 2018, revenues at U.S., Canada and Latin American countries grew 12% year over year while Europe, Asia and other markets improved 15% year over year at CER.

In the past three months, shares of ResMed have outperformed the broader industry with the stock having rallied 11.4%, higher than the broader industry’s 2.9% rise.

However, challenges like competitive bidding and reimbursement issues continue to plague the stock. The company also remains exposed to foreign exchange fluctuations. Additionally, rising operating expenses are other major headwinds.

Key Picks

A few better-ranked stocks in the broader medical space are athenahealth, Inc. (NASDAQ:ATHN) , Centene Corporation (NYSE:CNC) and Mednax, Inc. (NYSE:MD) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

athenahealth has a projected long-term growth rate of 20.7%. The stock has returned 10% in the past three months.

Centene has a long-term growth rate of 14.4%. The stock has rallied 18.9% in the past six months.

Mednax has an expected long-term growth rate of 10%. In the past six months, the stock has jumped 26%.

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