Goldman Sachs Initiates Coverage on ResMed with "Buy" Rating
Thursday, Jan 16, 2025 2:11 pm ET
3min read Goldman Sachs has initiated coverage on ResMed Inc. (NYSE: RMD, ASX: RMD) with a "Buy" rating and a price target of A$48.9, driven by strong growth prospects in its continuous airway pressure (CPAP) therapy segment. The investment bank highlights several key factors contributing to ResMed's investment thesis, including rising awareness of obstructive sleep apnea (OSA), market share gains in OSA masks, and operating margin expansion through cost management and product mix optimization.
Rising awareness of obstructive sleep apnea (OSA) is a significant driver for ResMed's investment potential. As awareness of OSA increases, so does the demand for treatment options, including ResMed's CPAP therapy segment. This increased demand is reflected in the company's strong revenue growth, with Goldman Sachs forecasting mask revenue growth exceeding consensus estimates by 2.4%-10.7% for fiscal 2025-27.
Market share gains in OSA masks are another important factor contributing to ResMed's investment potential. The company's ongoing innovation, with new mask and accessory launches expected in late 2024, is likely to further enhance its market position. ResMed's ability to successfully share its cost growth with customers and expand its operating margins through cost management and product mix optimization also plays a significant role in its investment potential. By achieving the upper end of its fiscal 2030 revenue growth target, ResMed could further solidify its position as a leading player in the sleep apnea treatment market.
Goldman Sachs believes that CPAP therapy will coexist with GLP-1 drugs for OSA treatment, supported by clinical data and insurance policies. ResMed's app engagement also indicates strong therapy compliance, further bolstering the investment thesis.
ResMed's strong financial performance, with revenue growing by 10.95% in 2024 and net income increasing by 13.75% in the same year, reflects the segment's strong performance. The company's robust balance sheet, high profitability, and competitive position, along with industry-wide price tailwinds and successful cost management, make ResMed an attractive investment opportunity for those looking to capitalize on the growing demand for sleep apnea treatment options.
In conclusion, ResMed's strong growth prospects in its CPAP therapy segment, driven by rising awareness of OSA, market share gains, operating margin expansion, and the coexistence of CPAP therapy with GLP-1 drugs, contribute significantly to the company's investment potential. These factors, combined with ResMed's strong financial performance, make the company an attractive investment opportunity for those seeking exposure to the growing demand for sleep apnea treatment options.
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