ResMed Inc. RMD has been gaining investors’ confidence on consistently positive results. Over the past year, the company’s shares have outperformed its industry. The stock has gained 38.3% during the same time compared with 6.4% growth of the industry. Also, the company has outperformed the S&P 500’s 12.7% rise during this period.
The renowned cloud-connected medical devices and out-of-hospital software-as-a-service (“SaaS”) business provider, which specializes in sleep apnea devices, has a market cap of $20.91 billion. The company’s five-year projected growth rate looks impressive at 10.6%. It is expected to scale new highs in the near term. The company has average positive earnings surprise of 5.3% for the trailing four quarters.
With solid prospects, the Zacks Rank #2 (Buy) company is a worthy investment choice right now.
What Makes the Stock an Attractive Pick?
Product Launches: ResMed successfully launched its portable oxygen concentrator (Mobi) in the United States for Chronic Obstructive Pulmonary Disease (“COPD”) or other chronic diseases. Following this, it is planning a complete launch in other countries in 2019, after acquiring the necessary clearances. The company also launched an automated ReSupply solution for all U.S. home medical equipment (“HME”) providers in the United States.
Further, it recently expanded the AirFit mask portfolio by introducing AirFit N30i (a nasal CPAP mask) in the United States. For 2019, the company has more launches planned for other geographies. The company’s three most recent mask launches, namely, F30, N30i and P30i, have been contributing to the top line significantly. In October 2019, it launched N30 (a tube-down nasal cradle CPAP mask), which is its latest offering.
Acquisitions and Partnerships to Add Value: ResMed recently formed an alliance with Cerner Corporation within ResMed’s SaaS portfolio to help care providers take more informed treatment decisions, thereby reducing costs and delivering hassle-free healthcare.
In March, ResMed acquired home medical equipment provider HB Healthcare in South Korea. ResMed intends to reach millions of patients through HB Healthcare’s wide network of distributor partners.
The company also acquired Propeller Health (a digital therapeutics company, providing connected health solutions for COPD and asthma patients) in January 2019. Per ResMed, this is a significant value-addition to its respiratory care portfolio.
Further, ResMed is working toward the collaboration with Verily to develop software solutions that will assist healthcare providers to discover, diagnose, treat and manage individuals with sleep apnea and other breathing-related sleep conditions.
End-Market Growth Strong: The company is expecting strong growth for the atrial fibrillation and chronic disease management segments. It has been witnessing robust growth in its Brightree service portfolio and additional contribution from MatrixCare and HEALTHCAREfirst buyouts. It is also concentrating on the development of homecare ventilation for COPD, Amyotrophic Lateral Sclerosis (“ALS”) and other respiratory disorders for the emerging markets in China, India and Brazil.
Which Way Are Estimates Heading?
The estimate revision trend for the company for the current year is impressive. Over the past 30 days, the Zacks Consensus Estimate for its earnings has moved up 2.6% to $4.02.
The Zacks Consensus Estimate for 2020 revenues is pegged at $2.86 billion, suggesting 9.9% rise from the year-ago reported number.
Other Key Picks
Some other top-ranked stocks from the broader medical space are Aphria Inc. APHA, Owens & Minor, Inc. OMI and LeMaitre Vascular, Inc. LMAT.
Aphria, currently carrying a Zacks Rank #2, has projected first-quarter 2020 earnings growth rate at 113.33%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Owens & Minor estimates earnings growth rate of 300% for third-quarter 2019. It currently sports a Zacks Rank #1.
LeMaitre Vascular’s long-term earnings growth rate is projected at 10%. The stock currently carries a Zacks Rank of 2.
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