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Here's Why You Should Add RMD Stock to Your Portfolio Now
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ResMed Inc.’s (RMD - Free Report) growth in the first quarter of fiscal 2025 can be attributed to the robust performance of its Mask business. Its Device sales continue to drive overall revenue growth, driven by the combined availability of Airsense10 and Airsense11. The company’s investment in newer-to-market technologies within its Respiratory Care product space looks encouraging. However, the increasing debt burden on ResMed’s operations remains a concern.
In the past year, shares of this Zacks Rank #1 (Strong Buy) company have surged 55.4%, outperforming the industry’s 23.1% growth and the S&P 500 composite’s 33% rise.
The renowned medical device company has a market capitalization of $35.10 billion. RMD has an earnings yield of 14.8%, outpacing the industry’s 14.4%. The company’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.4%.
Let’s delve deeper.
RMD’s Key Tailwinds
Robust Mask Sales: ResMed continues to see strong demand for its market-leading mask portfolio, gaining from a competitor’s recall. Continued product development is driving growth within this business globally. The company has successfully introduced a full suite of masks in its AirFit and AirTouch ranges. ResMed also offers advanced and expanded integrations of its therapy-based software solutions, including AirView. During the fiscal first quarter, AirFit F40 performed extremely well in the U.S. market.
Revenues from Masks and other businesses increased 11% year over year globally, including an increase of 10% in the United States, Canada and Latin America. In line with this, masks and accessories growth was augmented by new patient activations as well as an ongoing resupply program. Additionally, the company experienced growth of 11% in Europe, Asia and other regions.
Recovery in Device Sales: ResMed’s increased device sales continue to drive overall revenue growth, reflecting the ongoing combined availability of AirSense 10 and AirSense 11 sleep devices to support strong underlying global demand.
During the fiscal first quarter, the company continued to maintain its market leadership position depending upon its two AirSense platforms. Globally, device sales grew 10% reportedly. In the United States, Canada and Latin America, device sales increased 11%. In Europe, Asia and other regions, device sales increased 9% on a constant-currency basis. Global device sales were driven by strong market performance from the AirSense 10 and AirSense 11 platforms.
Respiratory Care Products Continue to Flourish: ResMed’s respiratory care business continues to drive growth and the adoption of bilevel and other non-invasive ventilator solutions worldwide. The company is investing in newer-to-market technologies for patients with chronic obstructive pulmonary disease (COPD) and other respiratory insufficiency conditions, including neuromuscular disease.
The company is currently working on home-based high-flow therapy for treating COPD at home.
Image Source: Zacks Investment Research
RMD continues to invest in clinical and economic trials for high-flow therapy. As ResMed develops these next-generation therapies, it will generate strong clinical evidence and economic outcomes that will support the broader adoption of these innovations, which are key for treating respiratory conditions at home.
RMD’s Key Headwind
Escalating Debt Level: The company’s high debt level is a concern. As of Sept. 30, 2024, long-term debt was $688 million, while cash and cash equivalents totaled $426.4 million. A higher debt level induces higher interest payments, which comes with the risk of failure to pay the same. At the end of the first quarter of fiscal 2025, the company had a payout rate of 23.8%, down sequentially.
RMD’s Estimate Trend
The Zacks Consensus Estimate for ResMed’s fiscal 2025 earnings has moved north 2.1% to $9.28 per share in the past 30 days.
The consensus estimate for fiscal 2025 revenues is pegged at $5.07 billion, which indicates an 8.2% increase from the year-ago number.
Haemonetics has an earnings yield of 5.02% compared with the industry’s 1.18%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 19.39%. Its shares have risen 1.8% compared with the industry’s 23.1% growth in the past year.
Globus Medical, carrying a Zacks Rank #2 at present, has a long-term estimated growth rate of 14.1%. Shares of the company have rallied 75.5% compared with the industry’s 19.9% growth. GMED’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.65%.
Penumbra, carrying a Zacks Rank #2 at present, has an estimated 2024 earnings growth rate of 33.5% compared with the industry’s 15.9%. Shares of Penumbra have risen 4.4% compared with the industry’s 20% growth over the past year. PEN’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 10.54%.
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Here's Why You Should Add RMD Stock to Your Portfolio Now
ResMed Inc.’s (RMD - Free Report) growth in the first quarter of fiscal 2025 can be attributed to the robust performance of its Mask business. Its Device sales continue to drive overall revenue growth, driven by the combined availability of Airsense10 and Airsense11. The company’s investment in newer-to-market technologies within its Respiratory Care product space looks encouraging. However, the increasing debt burden on ResMed’s operations remains a concern.
In the past year, shares of this Zacks Rank #1 (Strong Buy) company have surged 55.4%, outperforming the industry’s 23.1% growth and the S&P 500 composite’s 33% rise.
The renowned medical device company has a market capitalization of $35.10 billion. RMD has an earnings yield of 14.8%, outpacing the industry’s 14.4%. The company’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.4%.
Let’s delve deeper.
RMD’s Key Tailwinds
Robust Mask Sales: ResMed continues to see strong demand for its market-leading mask portfolio, gaining from a competitor’s recall. Continued product development is driving growth within this business globally. The company has successfully introduced a full suite of masks in its AirFit and AirTouch ranges. ResMed also offers advanced and expanded integrations of its therapy-based software solutions, including AirView. During the fiscal first quarter, AirFit F40 performed extremely well in the U.S. market.
Revenues from Masks and other businesses increased 11% year over year globally, including an increase of 10% in the United States, Canada and Latin America. In line with this, masks and accessories growth was augmented by new patient activations as well as an ongoing resupply program. Additionally, the company experienced growth of 11% in Europe, Asia and other regions.
Recovery in Device Sales: ResMed’s increased device sales continue to drive overall revenue growth, reflecting the ongoing combined availability of AirSense 10 and AirSense 11 sleep devices to support strong underlying global demand.
During the fiscal first quarter, the company continued to maintain its market leadership position depending upon its two AirSense platforms. Globally, device sales grew 10% reportedly. In the United States, Canada and Latin America, device sales increased 11%. In Europe, Asia and other regions, device sales increased 9% on a constant-currency basis. Global device sales were driven by strong market performance from the AirSense 10 and AirSense 11 platforms.
Respiratory Care Products Continue to Flourish: ResMed’s respiratory care business continues to drive growth and the adoption of bilevel and other non-invasive ventilator solutions worldwide. The company is investing in newer-to-market technologies for patients with chronic obstructive pulmonary disease (COPD) and other respiratory insufficiency conditions, including neuromuscular disease.
The company is currently working on home-based high-flow therapy for treating COPD at home.
Image Source: Zacks Investment Research
RMD continues to invest in clinical and economic trials for high-flow therapy. As ResMed develops these next-generation therapies, it will generate strong clinical evidence and economic outcomes that will support the broader adoption of these innovations, which are key for treating respiratory conditions at home.
RMD’s Key Headwind
Escalating Debt Level: The company’s high debt level is a concern. As of Sept. 30, 2024, long-term debt was $688 million, while cash and cash equivalents totaled $426.4 million. A higher debt level induces higher interest payments, which comes with the risk of failure to pay the same. At the end of the first quarter of fiscal 2025, the company had a payout rate of 23.8%, down sequentially.
RMD’s Estimate Trend
The Zacks Consensus Estimate for ResMed’s fiscal 2025 earnings has moved north 2.1% to $9.28 per share in the past 30 days.
The consensus estimate for fiscal 2025 revenues is pegged at $5.07 billion, which indicates an 8.2% increase from the year-ago number.
Other Key Picks
Some other top-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , Globus Medical (GMED - Free Report) and Penumbra (PEN - Free Report) .
Haemonetics has an earnings yield of 5.02% compared with the industry’s 1.18%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 19.39%. Its shares have risen 1.8% compared with the industry’s 23.1% growth in the past year.
HAE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Globus Medical, carrying a Zacks Rank #2 at present, has a long-term estimated growth rate of 14.1%. Shares of the company have rallied 75.5% compared with the industry’s 19.9% growth. GMED’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.65%.
Penumbra, carrying a Zacks Rank #2 at present, has an estimated 2024 earnings growth rate of 33.5% compared with the industry’s 15.9%. Shares of Penumbra have risen 4.4% compared with the industry’s 20% growth over the past year. PEN’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 10.54%.