On Monday, ResMed Inc. (NYSE:RMD) received a positive outlook from Mizuho Securities, as the firm raised its price target on the stock to $250 from the previous $230 while maintaining an Outperform rating. The adjustment comes in anticipation of ResMed's Analyst Day event, which is set to take place today at the New York Stock Exchange beginning at 12pm ET.
The company is expected to cover a range of topics during the event, including the advantages of wearable diagnostic technologies like those offered by Samsung (KS:005930) Galaxy and Apple (NASDAQ:AAPL) iOS devices. Another point of discussion will likely be the company's GLP-1 strategy in light of Eli Lilly (NYSE:LLY)'s anticipated label expansion for Zepbound later in the year. Additionally, updates on ResMed's pipeline, including investments in Nyxoah and Apnimed, will be provided.
The Analyst Day is also set to offer insights into the competitive landscape, particularly in relation to React Health and Philips. Moreover, ResMed's capital deployment priorities will be outlined. Mizuho anticipates that the company will set fresh long-range planning targets, indicating an expected above-market growth of over 5% in devices and resupply. Furthermore, an adjusted operating margin target ranging between 33-35% is projected, contingent on the revenue mix.
In other recent news, ResMed reported a robust financial performance in the fourth quarter of fiscal year 2024 with a 9% increase in group revenue, reaching $1.22 billion, primarily driven by strong mask sales in the United States. The company also reported a 10% increase in its quarterly dividend to shareholders, reduced its debt by $300 million, and repurchased 232,000 shares for $50 million.
Amid these developments, ResMed has been the focus of multiple analyst reviews. Baird maintained an Outperform rating on ResMed shares, despite some investor concerns about the company's earnings per share and operating margin projections.
However, Wolfe Research downgraded ResMed from Peer Perform to Underperform due to concerns about potential market disruption from Eli Lilly's expected new medication for obstructive sleep apnea. In contrast, William Blair maintained an Outperform rating on ResMed, anticipating a significant increase in sleep apnea and CPAP patients by 2025. Needham also downgraded its rating from Buy to Hold, citing anticipated challenges in the competitive landscape and slowing growth.
InvestingPro Insights
ResMed's strong market position, as highlighted in Mizuho's positive outlook, is further supported by real-time data from InvestingPro. The company's revenue growth of 10.95% over the last twelve months and a robust EBITDA growth of 18.69% in the same period underscore its solid financial performance. This aligns with the anticipated above-market growth discussed in the article.
InvestingPro Tips reveal that ResMed has raised its dividend for 12 consecutive years, demonstrating a commitment to shareholder returns. This could be particularly relevant to the company's capital deployment priorities mentioned in the article. Additionally, the tip indicating that ResMed is trading near its 52-week high corroborates the positive sentiment expressed by Mizuho's increased price target.
For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for ResMed, providing deeper insights into the company's financial health and market position.
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