On Apr 3, 2019, we issued an updated research report on ResMed Inc. RMD. The stock carries a Zacks Rank #3 (Hold).
The company achieved strong global revenue growth over the last few quarters on the back of robust sales of sleep devices, respiratory care devices, mask systems and software solutions. Also, the Brightree buyout has acted as a significant contributor to ResMed’s operating results through 2018.
In this regard, ResMed registered solid constant currency growth across all geographical regions in the last reported quarter. Overall, the company saw sturdy sales from Software-as-a-Service business and the new mask products and devices.
Within Software-as-a-Service, the company recorded steady growth in the Brightree service offerings and an incremental contribution from the buyouts of MatrixCare and HEALTHCAREfirst.
ResMed Inc. Price
ResMed Inc. Price | ResMed Inc. Quote
We expect the company’s product launches and strategies to gain traction from the sleep-disordered breathing market and further boost its near-term performance. Among the recent developments, in January 2019, following a successful initial launch, ResMed announced the complete unveiling of its portable oxygen concentrator — Mobi — in the United States for COPD or other chronic diseases. The company plans to introduce Mobi in other countries this year post the necessary regulatory approvals.
This apart, ResMed recently closed the Propeller Health acquisition for $225 million. Per management, ResMed’s cloud-connected ventilators suite for people with stage III and IV COPD (including Astral, Stellar and AirCurve 10 ST-A with iVAPS new portable oxygen concentrator Mobi) is compatible with the Propeller’s portfolio, catering to patients with stage II and III severity levels of COPD. Thus, the transaction is expected to expand ResMed’s COPD offerings. Earlier, in the first-quarter fiscal 2019, the company re-launched the portable oxygen concentrator called Activox.
In the past month, shares of ResMed have outperformed the broader industry. The stock has inched up 0.6% against the 0.3% decline of the industry.
However, challenges like competitive bidding and reimbursement issues persistently plague the stock. The company is also constantly exposed to foreign exchange fluctuations. Additionally, its rising operating expenses are another major headwind.
Zacks Ranks and Key Picks
Some better-ranked stocks in the broader medical space are Stryker Corporation SYK, Penumbra, Inc., PEN and Amedisys, Inc AMED, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker’s long-term earnings growth rate is projected at 10%
Penumbra’s long-term earnings growth rate is estimated at 20.9%.
Amedisys’s long-term earnings growth rate is forecast to be 19.7%.
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