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ResMed (RMD) Rides on Strong SaaS Growth & New Product Suite

Zacks Equity Research

On Jul 8, 2019, we issued an updated research report on ResMed Inc. RMD. The stock carries a Zacks Rank #2 (Buy).

In the past three months, shares of ResMed have outperformed its industry. The stock has rallied 21.8% compared with the 4.5% rise of the industry.

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.

Overall, the company attained double-digit global revenue growth in the reported quarter, led by solid sales from Software-as-a-Service (Saas) businesses as well as new mask products and devices. Within Software-as-a-Service, the company recorded a steady uptick in Brightree service offerings and an incremental contribution from the buyouts of MatrixCare and HEALTHCAREfirst.

ResMed Inc. Price

ResMed Inc. Price

ResMed Inc. price | ResMed Inc. Quote

We expect ResMed’s series of product launches and strategies to gain traction from the sleep-disordered breathing market, which should further boost its near-term performance. In this regard, the company recently expanded its AirFit mask portfolio with the introduction of its first top-of-head-connected nasal CPAP mask — AirFit N30i — in the United States. The product is available across Canada, Australia, New Zealand and most of Europe with more unveilings planned ahead for other geographies by late 2019.

ResMed has also announced a complete launch of its portable oxygen concentrator — Mobi — in the United States for COPD (Chronic Obstructive Pulmonary Disease) or other chronic diseases. The company plans to unpack Mobi in other countries during the ongoing year after fulfilling the necessary regulatory approvals.

However, challenges like competitive bidding and reimbursement issues persistently plague the stock. The company is also constantly exposed to unfavorable foreign exchange fluctuations. Additionally, its rising operating expenses are a major headwind.

Other Key Picks

A few other top-ranked stocks in the broader medical space are Teleflex Inc. TFX, Penumbra PEN and Bruker Corporation BRKR, each currently carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Teleflex’s long-term earnings growth rate is expected to be 13.7%.

Penumbra’s long-term earnings growth rate is projected at 21.5%.

Bruker’s long-term earnings growth rate is estimated at 12.6%.

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Teleflex Incorporated (TFX) : Free Stock Analysis Report
 
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