Stock of the Day

February 12, 2020

ResMed (RMD)

$231.61
-$1.18 (-0.5%)
Market Cap: $34.19B

About ResMed

ResMed Inc. develops, manufactures, distributes, and markets medical devices and cloud-based software applications for the healthcare markets. The company operates in two segments, Sleep and Respiratory Care, and Software as a Service. It offers various products and solutions for a range of respiratory disorders, including ApneaLink Air, a portable diagnostic device that measures oximetry, respiratory effort, pulse, nasal flow, and snoring; and NightOwl, a portable, cloud-connected, and disposable diagnostic device that measures AHI based on derived peripheral arterial tone, actigraphy, and oximetry over several nights. The company also provides AirView, a cloud-based system that enables remote monitoring and changing of patients' device settings; myAir, a personalized therapy management application for patients with sleep apnea that provides support, education, and troubleshooting tools for increased patient engagement and improved compliance; U-Sleep, a compliance monitoring solution that enables home medical equipment (HME) to streamline their sleep programs; connectivity module and propeller solutions; and Propeller portal. It offers out-of-hospital software solution, such as Brightree business management software and service solutions to providers of HME, pharmacy, home infusion, orthotics, and prosthetics services; MatrixCare care management and related ancillary solutions to senior living, skilled nursing, life plan communities, home health, home care, and hospice organizations, as well as related accountable care organizations; HEALTHCAREfirst that offers electronic health record, software, billing and coding services, and analytics for home health and hospice agencies; and MEDIFOX DAN's software solutions. The company markets its products to sleep clinics, home healthcare dealers, and hospitals through a network of distributors and direct sales force. ResMed Inc. was founded in 1989 and is headquartered in San Diego, California.

ResMed Bull Case

Here are some ways that investors could benefit from investing in ResMed Inc.:

  • ResMed Inc. has a strong return on equity of 26.17%, indicating effective management and profitability relative to shareholder equity, which can attract investors looking for solid financial performance.
  • The company recently announced a quarterly dividend of $0.53, translating to an annualized dividend of $2.12 and a yield of 0.91%. This consistent dividend payment can provide a steady income stream for investors.
  • Recent analyst upgrades have increased the price targets for ResMed Inc., with JPMorgan Chase raising their target from $270.00 to $286.00, suggesting positive market sentiment and potential for stock price appreciation.
  • ResMed Inc. operates in the growing healthcare sector, focusing on innovative medical devices and cloud-based software applications, which positions the company well for future growth as demand for healthcare solutions increases.
  • The stock currently has a consensus rating of "Moderate Buy" from analysts, indicating overall positive sentiment and potential for upward movement in stock price.

ResMed Bear Case

Investors should be bearish about investing in ResMed Inc. for these reasons:

  • Despite the positive outlook, one analyst has issued a sell rating on the stock, which may indicate concerns about potential risks or market volatility that could affect performance.
  • The company has a relatively low insider ownership of 0.71%, which may suggest a lack of confidence from executives in the company's future performance, potentially deterring some investors.
  • ResMed Inc. has a payout ratio of 25.03%, which, while sustainable, indicates that a significant portion of earnings is distributed as dividends, potentially limiting funds available for reinvestment in growth opportunities.
  • Market analysts forecast earnings per share of 9.44 for the current fiscal year, which may not meet the expectations of growth-oriented investors looking for higher returns.
  • With hedge funds and institutional investors holding 54.98% of the stock, retail investors may find it challenging to influence stock price movements, leading to concerns about liquidity and market dynamics.

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