Assessing ResMed (RMD) Valuation After Recent Share Price Swings And Growth Expectations

ResMed stock snapshot after recent moves

ResMed (RMD) has drawn attention after recent share price swings, with the stock closing at US$259.62. For context, the company reports annual revenue of US$5.40b and net income of US$1.49b.

See our latest analysis for ResMed.

Recent weakness, including a 1-day share price return of a 1.49% decline and a softer 7-day move, sits against a steadier backdrop. The year-to-date share price return of 6.05% alongside a 1-year total shareholder return of 10.96% points to momentum holding up over longer periods.

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With ResMed trading at US$259.62 against an analyst price target of US$297.47 and an estimated intrinsic discount of about 6%, you have to ask: is there still potential upside, or is future growth already fully reflected in the price?

Most Popular Narrative: 12.4% Undervalued

ResMed’s fair value in the most followed narrative sits at about $296.40, compared with the last close at $259.62. This sets up an interesting valuation gap for investors to unpack.

Analysts are assuming ResMed's revenue will grow by 7.8% annually over the next 3 years.

Analysts assume that profit margins will increase from 27.2% today to 28.8% in 3 years time.

Read the complete narrative.

Curious what kind of earnings path and future P/E multiple need to line up for that fair value to hold? The narrative leans on steady revenue gains, thicker margins and a tighter share count to make the numbers work.

Result: Fair Value of $296.40 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that upside story can break if competitors, including alternative sleep apnea treatments, pull demand away from ResMed or if reimbursement pressure crimps pricing power.

Find out about the key risks to this ResMed narrative.

Build Your Own ResMed Narrative

If this perspective does not fully align with your own view, or you would like to test the assumptions independently, you can build a custom thesis, input your own expectations, and see how the fair value changes using Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding ResMed.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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