ResMed (RMD) Stock Forecast & Price Target

ResMed's stock outlook is bolstered by strong financial performance, highlighted by a gross margin of 62.3%, which exceeded consensus estimates by 40 basis points, alongside an operating margin of 36.3%, outperforming expectations by 70 basis points. Revenue growth in masks was notably robust at +16% year-over-year in constant currency, surpassing initial expectations, and solid market demand is evident as the company maintains a double-digit growth profile in this segment. Additionally, the company has increased its FY26 gross margin guidance midpoint by 50 basis points to 62.5%, reflecting ongoing efficiency and productivity initiatives, further supporting a positive financial trajectory.

ResMed's management has revised its FY26 growth outlook for its core segment to a mid-single-digit percentage increase, down from a previously higher projection, indicating potential concerns regarding sustained revenue growth amidst rising operational expenses. Despite an expected increase in FY26 EPS estimates from $10.97 to $11.12, the company may face challenges in the European and international markets, where sales of masks and devices fell short of expectations. Additionally, competition from Philips, which is reintegrating into the U.S. market, alongside potential medium-term disruptions from GLP-1 drugs affecting PAP volumes, raises significant concerns about ResMed's future market position and financial performance.