Morgan Stanley’s downgrade of ResMed (RMD), citing limited near term profit margin growth and rising competitive risks from Philips and GLP-1 weight-loss drugs, has put fresh attention on how the stock’s story is changing.
See our latest analysis for ResMed.
At a share price of US$188.63, ResMed has seen its 30 day share price return fall 9.22% and its year to date share price return fall 22.95%, while the 1 year total shareholder return is down 24.08%. This suggests recent downside pressure has followed growing concern about competitive and margin risks.
If you are reassessing healthcare exposure after the ResMed downgrade, it could be worth widening your radar to other sleep and treatment related opportunities via 41 healthcare AI stocks
With ResMed trading below some analyst price targets and various intrinsic value estimates, but facing clear competitive and margin questions, are you looking at a potential opportunity or a stock where the market already sees slower future growth?
Most Popular Narrative: 30.3% Undervalued
Against ResMed’s last close at $188.63, the most followed narrative points to a fair value of $270.60, framing a wide valuation gap that hinges on execution in sleep health and software.
Strategic investments in expanding the diagnosis and treatment funnel, including acquisitions like VirtuOx, Ectosense, and Somnoware, are improving patient flow from screening to therapy, positioning ResMed to capture a larger share of the substantial underpenetrated global sleep apnea and respiratory market, supporting long term revenue growth.
Want to see how this sleep funnel thesis tries to justify that higher value? The narrative leans heavily on revenue expansion, margin resilience, and a future earnings multiple that assumes investors stay comfortable paying for those cash flows.
Result: Fair Value of $270.60 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, ResMed’s story also hinges on how it handles pricing and reimbursement pressure, as well as the threat that GLP-1 drugs and alternative therapies could curb device demand.
Find out about the key risks to this ResMed narrative.
Next Steps
If the mixed tone around ResMed has you undecided, now is a good time to check the underlying data yourself and stress test both the bullish and cautious angles. To see why some investors are still optimistic about its potential rewards, review the 4 key rewards
Looking for more investment ideas beyond ResMed?
If ResMed has prompted you to rethink your portfolio, now is the moment to line up fresh ideas before the next round of opportunities moves out of reach.
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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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