ResMed (RMD) Stock Forecast & Price Target

ResMed's operating margin increased by 80 basis points year-over-year, driven largely by a gross margin expansion of 230 basis points, resulting from factors such as pricing strategies, manufacturing efficiencies, and reduced component costs. The company's respiratory sales in the Americas reached $749 million, reflecting a robust 12% growth, while SaaS sales also demonstrated resilience, generating $157 million despite missing consensus expectations. Looking ahead, ResMed anticipates further enhancements in gross and operating margins due to supply chain improvements and a favorable shift in product mix, alongside strong expectations for an increase in CPAP patient numbers, contributing to a structurally growing market.

ResMed's gross margin remained flat sequentially, indicating potential concerns regarding profitability. The company's revenue growth is projected to slow, with estimates falling below 5% due to anticipated market share losses stemming from Philips' re-entry into the flow generator market and pressures from GLP-1 weight loss drugs. Additionally, the projected earnings per share for FY27 have been revised to reflect a Street-low estimate, suggesting worsening financial performance in the coming years.