Resmed
RMD
$210.98
+1.16%
ResMed Inc. is a global leader in respiratory care devices, primarily developing and supplying flow generators, masks, and accessories for the treatment of sleep apnea, with a growing focus on digital health solutions. The company operates in the medical devices industry, earning roughly two-thirds of its revenue in the Americas and the rest across Europe, Japan, and Australia. ResMed's competitive identity is anchored in its market leadership in sleep-disordered breathing and its strategic pivot toward out-of-hospital care and connected care data. The current investor narrative centers on the company's resilience amid a challenging demand environment, recent acquisitions like Noctrix Health for Restless Legs Syndrome, and debates about growth sustainability as the stock has corrected significantly from its 52-week high.…
RMD
Resmed
$210.98
Related headlines
Investment Opinion: Should I buy RMD Today?
Based on the analysis, I rate ResMed a Buy. The company combines solid revenue growth (10.8% YoY in Q3 FY2026) with high profitability (operating margin of 32.7%) and a reasonable valuation (forward PE of 17.5x, PEG of 0.72). The consensus analyst target of $248.60 implies 17.8% upside, and the low PEG suggests the stock is undervalued relative to its growth prospects.
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RMD 12-Month Price Forecast
The AI assessment is bullish on RMD, with medium confidence. The company's strong fundamentals, including accelerating revenue growth and high profitability, support a positive outlook. The valuation is attractive on a forward basis, and the PEG ratio suggests the stock is undervalued. However, recent analyst downgrades and the stock's underperformance warrant caution. The stance would be upgraded to high confidence if revenue growth exceeds 12% and the stock breaks above its 50-day moving average. It would be downgraded to neutral if growth falls below 7% or if margins deteriorate.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Resmed's 12-month outlook, with a consensus price target around $248.60 and implied upside of +17.8% versus the current price.
Average Target
$248.60
0 analysts
Implied Upside
+17.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$180 - $325
Analyst target range
ResMed is covered by 15 analysts, with a consensus recommendation of 'Buy' (mean rating of 2.39 on a scale where 1 is Strong Buy and 5 is Sell). The average price target is $248.60, implying an upside of 17.8% from the current price of $210.98. The distribution of ratings includes 10 Buy/Outperform, 4 Hold/Neutral, and 1 Sell, indicating a generally bullish sentiment but with some caution. The high target of $325 suggests a potential upside of 54.1%, while the low target of $180 implies a downside of 14.7%, reflecting a wide range of outcomes. Recent rating actions show a mixed trend: Citigroup downgraded from Buy to Neutral in July 2026, and Morgan Stanley downgraded from Overweight to Equal Weight in June 2026, while Mizuho and RBC Capital maintain Outperform ratings. This divergence suggests uncertainty about near-term growth prospects, but the overall consensus remains positive.
Bulls vs Bears: RMD Investment Factors
ResMed presents a mixed picture: strong fundamentals with accelerating revenue growth, high margins, and a low PEG ratio are countered by significant underperformance, recent analyst downgrades, and a premium valuation. The bull case is supported by solid execution and a favorable growth outlook, while the bear case hinges on valuation risk and potential growth deceleration. Currently, the evidence slightly favors the bulls, as the forward PE of 17.5x and PEG of 0.72 suggest the stock is reasonably priced for its growth. The most critical tension is whether the company can sustain its ~10% revenue growth and expand margins to justify the premium, or if competitive pressures and market saturation will lead to a de-rating. This resolution will determine whether RMD is a value opportunity or a value trap.
Bullish
- Accelerating Revenue Growth: Q3 FY2026 revenue grew 10.8% YoY to $1.43 billion, accelerating from 6.6% in the prior quarter. This marks the eighth consecutive quarter of growth, with a compound quarterly growth rate of ~2.3%, indicating strong demand for sleep apnea and digital health solutions.
- High Profitability and Margins: ResMed boasts a gross margin of 59.4% and an operating margin of 32.7%, both well above industry averages. Net margin is 27.2%, reflecting efficient cost management and pricing power in a competitive medical devices market.
- Undervalued on PEG Ratio: With a PEG ratio of 0.72, the stock trades below 1, suggesting it is undervalued relative to its expected earnings growth. The forward PE of 17.5x is attractive given the anticipated ~54% earnings growth implied by the trailing-to-forward PE gap.
- Strong Analyst Consensus: The consensus rating is 'Buy' with a mean rating of 2.39, and the average price target of $248.60 implies 17.8% upside. Ten of 15 analysts rate it Buy/Outperform, reflecting confidence in the company's growth trajectory despite recent downgrades.
Bearish
- Significant Underperformance vs. Market: RMD is down 22.4% over the past year, while the S&P 500 gained 18.2%, a relative underperformance of over 40 percentage points. The stock sits at 71.8% of its 52-week range, near the lower end, reflecting persistent selling pressure.
- Recent Analyst Downgrades: Citigroup downgraded from Buy to Neutral in July 2026, and Morgan Stanley downgraded from Overweight to Equal Weight in June 2026. These actions signal near-term uncertainty about growth sustainability, despite the overall bullish consensus.
- High Valuation Premium: The trailing PE of 27.0x is 23% above the industry average of 22x. While justified by superior margins, this premium leaves little room for error; any earnings miss could trigger multiple compression.
- Concentration in Core Sleep Business: Sleep and Respiratory Care generates 87.8% of revenue, creating concentration risk. If the sleep apnea market faces disruption (e.g., new competitors or therapy alternatives), the entire business could be impacted.
RMD Technical Analysis
ResMed's price trend over the past year has been a clear downtrend, with the stock down 22.4% over the trailing 12 months, significantly underperforming the S&P 500's +18.2% gain. The current price of $210.98 sits at 71.8% of its 52-week range (between $180.27 low and $293.81 high), indicating the stock is closer to the lower end of its range, suggesting a potential value opportunity but also reflecting persistent selling pressure. The 6-month price change of -18.3% confirms the intermediate-term bearish trend, though the stock has recently bounced off the lows.
Beta
0.78
0.78x market volatility
Max Drawdown
-37.8%
Largest decline past year
52-Week Range
$180-$294
Price range past year
Annual Return
-22.4%
Cumulative gain past year
| Period | RMD Return | S&P 500 |
|---|---|---|
| 1m | +4.9% | +0.3% |
| 3m | +2.9% | +4.0% |
| 6m | -18.3% | +8.3% |
| 1y | -22.4% | +20.2% |
| ytd | -13.8% | +9.6% |
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RMD Fundamental Analysis
ResMed's revenue growth has been solid, with the most recent quarter (Q3 FY2026, ended March 31, 2026) showing revenue of $1.43 billion, up 10.8% year-over-year, accelerating from the prior quarter's 6.6% growth (Q2 FY2026 revenue of $1.42 billion vs. $1.34 billion in Q2 FY2025). The company has consistently grown revenue over the past eight quarters, from $1.22 billion in Q4 FY2024 to $1.43 billion in Q3 FY2026, reflecting a compound quarterly growth rate of approximately 2.3%. Revenue segments show Sleep and Respiratory Care generating $1.26 billion (87.8% of total) and Residential Care Software contributing $167 million, indicating the core sleep business remains the primary growth driver, while software provides diversification.
Quarterly Revenue
$1.4B
2026-03
Revenue YoY Growth
+10.8%
YoY Comparison
Gross Margin
62.3%
Latest Quarter
Free Cash Flow
$1.7B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is RMD Overvalued?
Given ResMed's positive net income, the primary valuation metric selected is the price-to-earnings (PE) ratio. The trailing PE is 27.0x, while the forward PE is 17.5x, implying the market expects significant earnings growth over the next year. The gap between trailing and forward PE suggests a forward earnings growth rate of approximately 54%, which is optimistic but supported by the company's PEG ratio of 0.72, indicating the stock may be undervalued relative to its growth rate. Compared to the industry average PE of 22x (based on available data), ResMed trades at a 23% premium, which is justified by its superior gross margin of 59.4% and operating margin of 32.7%, both well above industry norms.
PE
27.0x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 21x~50x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
19.6x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks are moderate but manageable. ResMed's debt-to-equity is low at 0.14, and the current ratio of 3.44 indicates strong liquidity, reducing bankruptcy risk. However, the company's reliance on continued revenue growth to justify its premium valuation is a concern; if growth decelerates below the ~10% seen in Q3 FY2026, the stock could face multiple compression. Free cash flow of $1.75 billion TTM is healthy, but the recent $340 million acquisition of Noctrix Health adds integration risk, and the payout ratio of 22.2% suggests limited dividend growth potential. The high net margin of 27.2% is impressive, but any margin erosion due to pricing pressure or increased competition could impact profitability.
FAQ
The key risks include: (1) Financial risk: reliance on continued growth to justify the premium valuation; if growth slows, the stock could de-rate. (2) Competitive risk: the sleep apnea market is competitive, and new entrants could erode market share. (3) Macro risk: healthcare policy changes or reimbursement cuts could impact demand. (4) Company-specific risk: integration of Noctrix Health may face challenges. The most severe risk is a growth deceleration, which could lead to a 14.7% decline to the 52-week low. Overall, the risks are manageable given the company's strong balance sheet and market position.
The 12-month forecast is positive, with a base case probability of 50% targeting $248.60, a 17.8% upside. The bull case (30% probability) targets $325, a 54% upside, while the bear case (20% probability) targets $180, a 14.7% downside. The most likely scenario is the base case, assuming revenue growth of 8-10% and stable margins. The stock's future performance hinges on sustaining growth and avoiding competitive disruptions. Overall, the forecast is bullish, with a favorable risk-reward profile.
RMD is trading at a trailing PE of 27.0x, which is 23% above the industry average of 22x, suggesting a premium. However, the forward PE of 17.5x is more attractive, and the PEG ratio of 0.72 indicates the stock is undervalued relative to its expected growth. The market is pricing in significant earnings growth, as evidenced by the gap between trailing and forward PE. Compared to its own history, the stock is trading near the lower end of its 52-week range, suggesting it may be undervalued. Overall, the valuation is fair to slightly undervalued, making it an attractive entry point for growth investors.
RMD is a good buy for investors with a long-term horizon, given its strong fundamentals and reasonable valuation. The stock offers a 17.8% upside to the average analyst target of $248.60, and the PEG ratio of 0.72 suggests it is undervalued relative to growth. However, the stock has underperformed the market and faces near-term uncertainty, so it may be better suited for patient investors. The biggest downside risk is a growth deceleration, which could push the stock to the 52-week low of $180.27, a 14.7% decline. Overall, it is a good buy for those who believe in the long-term growth of the sleep apnea market.
RMD is more suitable for long-term investment, given its growth stage and defensive characteristics. The company has a beta of 0.775, indicating lower volatility than the market, and pays a small dividend (yield 0.82%). Earnings visibility is high due to the recurring nature of sleep apnea treatments. Short-term trading is possible, but the stock's recent volatility and analyst downgrades make it risky. A minimum holding period of 3-5 years is recommended to fully capture the growth potential and allow the valuation to play out.