Stock Analysis | ResMed Outlook - Navigating Mixed Signals in a Volatile Market

Market Snapshot

ResMed (RMD) is showing mixed signals, with a recent price drop of 2.25% despite a relatively strong internal fundamental score of 7.12 and positive fund flows. The technical picture, however, is weak with a score of 3.52 and bearish indicators dominating the chart.

News Highlights

Recent news in the health care sector has been mixed, with some developments potentially affecting ResMed:

• Stanford Health Care will receive $424.9 million from a municipal bond sale to finance healthcare projects. While this is not directly linked to ResMed, it reflects broader capital inflows into the healthcare sector, which could support long-term industry growth.
• Healthpoint Ventures is developing AI-based solutions to streamline healthcare billing, a trend that could impact ResMed’s broader market environment as digital transformation continues in the industry.
• Health-care stocks in general have lagged the broader market, with recent reports showing declines for companies like Edwards Lifesciences. This sector-wide underperformance may weigh on investor sentiment for ResMed in the short term.

Analyst Views & Fundamentals

Analysts remain divided on ResMed, with recent ratings showing a mix of Strong Buy, Buy, and Neutral outlooks. The simple average rating is 3.88, while the performance-weighted rating stands at 4.66. Although these scores are somewhat optimistic, they do not align with the current price trend of a 2.25% drop over recent sessions.

Key fundamental factors currently favoring ResMed include:

• Operating cash flow per share (YoY growth): 13.60% — this factor scored 10 (internal diagnostic score 0-10), reflecting strong cash generation.
• ROA (Return on Assets): 4.83% — a strong 9.5 score, indicating efficient use of assets.
• EV/EBIT: 22.82 — this factor earned a 9.25 score, suggesting reasonable valuation.
• Price-to-Sales (PS): 28.54 — the stock is expensive in this metric, with a 1.5 score.
• Gross Margin (GPM): 58.60% — this factor received a 8.5 score, showing solid profitability.

Overall, ResMed’s fundamentals are strong, but the divergence from price action may point to short-term technical concerns.

Money-Flow Trends

Fund flows for ResMed are positive across all categories, with an overall inflow ratio of 50.85%. This is driven by:

• Large and extra-large investors showing the strongest interest, with inflow ratios of 51.11% and 50.84%, respectively.
• Retail activity also remains positive at 50.48%, indicating broad-based buying.

The stock’s fund-flow score is 7.8 (internal diagnostic score 0-10), which is classified as “good.” This suggests that institutional and retail investors alike are optimistic about ResMed’s medium-term prospects despite the technical headwinds.

Key Technical Signals

The technical outlook for ResMed is weak with a score of 3.52 (internal diagnostic score 0-10) and bearish indicators outweighing bullish ones (4 to 1). Here are the key signals:

• RSI Overbought — scored 7.75 (internal diagnostic score 0-10), suggesting a neutral to slightly bullish move historically, but this may indicate overvaluation.
• Long Lower Shadow — scored 1.00 (internal diagnostic score 0-10), indicating a bearish reversal signal.
• Ex-Dividend Date and Dividend Record Date — both scored 1.34 (internal diagnostic scores 0-10), typically associated with short-term price pressure.
• MACD Death Cross — scored 4.53 (internal diagnostic score 0-10), suggesting a bearish momentum signal.
• Bearish Engulfing — scored 4.26 (internal diagnostic score 0-10), indicating a strong bearish reversal pattern.

Over the past five days, notable chart patterns included:

• August 14: Ex-Dividend and Record Dates.
• August 15: MACD Death Cross triggered.
• August 5: Long Lower Shadow formed.

Key insights suggest the market is volatile with no clear direction, and the momentum is bearish. Investors are advised to avoid entering at current levels until clarity emerges.

Conclusion

ResMed has solid fundamentals and is backed by positive fund flows, but the technical picture remains concerning with weak momentum and mixed analyst ratings. Investors may want to wait for a clearer trend or improved technical signals before committing. For now, watching the stock’s performance around its next earnings release and any key sector events may be the best course of action.