“Fourth quarter results are solid and broadly in line, with double-digit bottom line gains on improving gross profit margin (GPM), expanding operating leverage, and strong cash flow,” Raymond said.“Masks were strong (+15% cc), on new patient set-ups/resupply, while devices (+6% cc) were modestly softer on US sales (+5%), albeit cycling a tough comp (+30%).
“GPM surprised to the upside (yet again), as numerous tailwinds (e.g. cost optimisation, scale benefits, and favourable product mix) offset ongoing freight cost headwinds, with financial year 2025 targeting further gains (59-60%). “While not reflected in our forecasts, management believes market growth rates can accelerate 50-125 basis points, as it aspires to become a leading digital health “sleep concierge”, leveraging mega-trends and more targeted demand generation efforts.
“Financial year 2024-26 earnings increase up to 2.5%, with our target price rising to $35.93.
“We consider Resmed (RMD) to be an ADD,” Raymond said.
Resmed (RMD)
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.