A Look At ResMed (RMD) Valuation After Robust Q2 Beat And Upgraded Analyst Outlook

ResMed (RMD) is back in focus after a strong fiscal Q2, where its Masks & Accessories and Devices businesses outperformed expectations and analysts responded by lifting their financial outlook and maintaining positive coverage.

See our latest analysis for ResMed.

ResMed’s share price has moved to US$258.91, with a 6.15% 90 day share price return and a 1 year total shareholder return of 11.4%. This suggests momentum has been building around its recent Q2 beat and margin guidance.

If this Q2 update has you looking at sleep and respiratory care more broadly, it could be a good time to scan our screener of 25 healthcare AI stocks as potential next ideas.

With RMD now trading at US$258.91 and sitting below the average analyst price target, the key question is whether recent strength still leaves room for upside or if the market is already pricing in future growth.

Most Popular Narrative: 13% Undervalued

With ResMed’s fair value narrative sitting at about $297.47 against a last close of $258.91, the current setup frames a clear valuation gap for investors to test.

Acceleration in adoption of home-based, cloud-connected therapy solutions and digital health platforms (including software like Brightree and AirView) enhances recurring high-margin revenue streams and increases both user retention and net profit margins over time.

ResMed Future Earnings and Revenue Growth

Read the complete narrative.

Curious what earnings, revenue mix, and long term margin profile have to look like to support that higher fair value and a lower future P/E multiple? The full narrative spells out the glide path in detail, including how buybacks and software driven profitability assumptions knit together into that $297.47 figure.

Result: Fair Value of $297.47 (UNDERVALUED)

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

However, this hinges on sleep device demand and pricing holding up. Pressure from GLP 1 drugs, alternative therapies, regulation and reimbursement shifts are all capable of upsetting that glide path.

Find out about the key risks to this ResMed narrative.

Next Steps

If this all sounds upbeat but you are still undecided, it makes sense to move quickly. Review the key data yourself and weigh up 4 key rewards.

Looking for more investment ideas?

If ResMed has sharpened your focus, do not stop here. Broaden your watchlist now so you are not scrambling after the next big move.

• Target potential value opportunities by scanning our list of 53 high quality undervalued stocks that combine quality fundamentals with pricing that may still be catching up.
• Strengthen your income stream by reviewing 13 dividend fortresses, a set of companies offering 5%+ yields where stability and payouts are front and center.
• Prioritise resilience by checking our 80 resilient stocks with low risk scores, a group of businesses with lower risk scores that can help anchor a more balanced portfolio.

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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