ResMed
RMD
$229.44
+2.89%
ResMed Inc. is a global leader in respiratory care medical devices, primarily developing and manufacturing flow generators, masks, and accessories for the treatment of sleep apnea, along with a growing software-as-a-service platform for out-of-hospital care. The company operates in the medical instruments and supplies industry, with a dominant position in the sleep apnea market and an expanding footprint in digital health and connected devices. ResMed's competitive identity is defined by its scale, clinical data capabilities, and a vertically integrated ecosystem that spans hardware, software, and patient management. Currently, investor attention is focused on the company's ability to sustain double-digit revenue growth amid a structurally growing market driven by rising obesity rates and aging populations, while recent acquisitions like Noctrix Health signal a push into adjacent therapies such as Restless Legs Syndrome. The debate also centers on margin expansion potential from its software and mask franchise, and the impact of competitive dynamics in the flow generator market.…
RMD
ResMed
$229.44
Related headlines
Investment Opinion: Should I buy RMD Today?
Based on the synthesis of fundamental, valuation, and analyst data, ResMed receives a Buy rating. The core thesis is that the company's consistent double-digit revenue growth, expanding margins, and discounted valuation relative to its history and peers offer an attractive risk/reward profile. The analyst consensus of 'Buy' with an average target of $246.44 (12.9% upside) supports this view, although recent downgrades warrant caution.
The supporting evidence includes: 1) Revenue growth of 10.81% YoY in Q3 2026, driven by structural market growth; 2) Gross margin expansion to 62.25% from 59.33%, with operating margin at 34.92%; 3) A trailing PE of 18.67x, below the healthcare sector average of 20x-25x and near the low end of its 5-year range; 4) Strong free cash flow of $1.748 billion TTM and a debt-to-equity ratio of 0.125, providing financial flexibility. The forward PE of 16.50x implies earnings growth, and the PEG ratio of 2.00 suggests the stock is fully valued but not excessively so.
The biggest risks that could invalidate the thesis are: 1) Competitive pressures leading to market share loss and margin erosion; 2) Integration risks from acquisitions like Noctrix Health; 3) A broader market downturn or sector rotation away from healthcare. The rating would upgrade to a Strong Buy if the stock breaks above $240 and revenue growth accelerates above 12%, or downgrade to Hold if gross margins fall below 60% or revenue growth decelerates below 8%. Relative to its history and peers, the stock appears undervalued, trading at a discount to its historical PE range and the sector average.
Sign up to view all
RMD 12-Month Price Forecast
ResMed presents a compelling investment case with its consistent revenue growth, expanding margins, and discounted valuation relative to peers and its own history. The company's strong balance sheet and cash flow generation provide a cushion against economic uncertainties. However, the stock's recent underperformance and high PEG ratio suggest that the market is pricing in significant growth, leaving limited room for error. The analyst consensus remains positive, but recent downgrades indicate caution. I would upgrade to high confidence if the stock breaks above $240 and revenue growth accelerates, and downgrade to neutral if gross margins fall below 60% or competitive pressures intensify.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on ResMed's 12-month outlook, with a consensus price target around $246.44 and implied upside of +7.4% versus the current price.
Average Target
$246.44
0 analysts
Implied Upside
+7.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$175 - $320
Analyst target range
There are 16 analysts covering ResMed, with a consensus recommendation of 'Buy' and an average target price of $246.44. This implies an upside of approximately 12.9% from the current price of $218.27. The recommendation mean of 2.42 (on a scale where 1 is Strong Buy and 5 is Strong Sell) leans towards bullish sentiment, although the distribution includes a mix of Buy, Hold, and Outperform ratings. The consensus is moderately bullish, reflecting confidence in the company's growth trajectory and margin expansion. The target price range spans from a low of $175 to a high of $320, representing a wide spread of 82.9% from low to high. The high target of $320 assumes significant multiple expansion and accelerating growth, potentially driven by successful integration of acquisitions and new product launches. The low target of $175 prices in margin compression, competitive pressures, or a broader market downturn. Recent institutional ratings show a mix of actions, with Citigroup downgrading from Buy to Neutral on July 13, 2026, while Morgan Stanley downgraded from Overweight to Equal Weight on June 17, 2026. These downgrades suggest some caution among analysts, but the overall consensus remains positive. The wide target spread indicates high uncertainty, which may lead to increased volatility in the stock price.
Bulls vs Bears: RMD Investment Factors
The bull case for ResMed rests on its consistent double-digit revenue growth, expanding margins, and attractive valuation relative to its own history and the broader healthcare sector. The company's strong balance sheet, robust free cash flow, and dominant position in a structurally growing sleep apnea market provide a solid foundation. However, the bear case highlights persistent negative price momentum, a PEG ratio of 2.00 suggesting full valuation, and recent analyst downgrades that signal caution. The most critical tension is whether ResMed can sustain its growth trajectory and margin expansion amid competitive pressures and integration risks from acquisitions like Noctrix Health. Currently, the bull evidence appears stronger given the fundamental strength and discounted valuation, but the stock's recent underperformance and high PEG ratio warrant vigilance.
Bullish
- Consistent double-digit revenue growth: Q3 2026 revenue grew 10.81% YoY to $1.431 billion, continuing a multi-quarter trend of steady expansion. This growth is driven by rising sleep apnea diagnosis rates, an aging population, and increasing obesity prevalence, which underpin a structurally growing market.
- Strong margin expansion and profitability: Gross margin improved to 62.25% in Q3 2026 from 59.33% a year ago, while operating margin rose to 34.92% from 33.00%. Net income reached $398.73 million, reflecting a net margin of 27.86%, demonstrating pricing power and operating leverage.
- Attractive valuation relative to history and peers: The trailing PE of 18.67x is near the low end of its 5-year range (18x-49x) and below the healthcare sector average of 20x-25x. The forward PE of 16.50x suggests the market expects earnings growth to further compress the multiple, offering a potential value opportunity.
- Exceptional balance sheet and cash flow: Debt-to-equity is only 0.125 and the current ratio is 3.10, indicating minimal leverage and ample liquidity. Free cash flow TTM of $1.748 billion provides significant flexibility for dividends, buybacks, and strategic acquisitions like Noctrix Health.
Bearish
- Negative price momentum and underperformance: The stock is down 20.52% over the past year and 10.84% YTD, significantly underperforming the S&P 500's 16.22% gain. The 1-month relative strength versus SPY is -2.36%, indicating recent weakness despite a 3-month outperformance of 9.02%.
- High PEG ratio suggests full valuation: The PEG ratio of 2.00 indicates the stock may be fully valued relative to its expected earnings growth rate. This suggests that the market is already pricing in robust growth, leaving limited room for multiple expansion unless growth accelerates.
- Analyst downgrades signal caution: Recent downgrades from Citigroup (Buy to Neutral on July 13, 2026) and Morgan Stanley (Overweight to Equal Weight on June 17, 2026) reflect growing concerns about competitive pressures or margin sustainability. These actions may weigh on sentiment.
- Wide analyst target spread indicates uncertainty: The target price range spans from $175 to $320, an 82.9% spread, highlighting high uncertainty about the company's future performance. This divergence suggests that analysts are divided on the impact of competitive dynamics and acquisition integration.
RMD Technical Analysis
ResMed's stock is in a recovery phase within a broader downtrend, with a 1-year price change of -20.52% and a year-to-date decline of -10.84%. The current price of $218.27 sits at approximately 36.3% of its 52-week range (low of $180.27, high of $284.87), indicating that the stock is closer to its lows than highs, which could represent a value opportunity but also reflects persistent selling pressure. The max drawdown of -37.76% over the past year underscores the severity of the prior decline, and the stock is now attempting to stabilize above the 52-week low. Recent momentum shows a positive 3-month change of +12.06%, contrasting with a -3.42% decline over the past month, suggesting a short-term pullback within a nascent recovery. The 1-month relative strength versus SPY is -2.36%, indicating underperformance, while the 3-month relative strength is +9.02%, highlighting that the stock has outperformed the market over the medium term. This divergence between the 1-month and 3-month trends could signal a temporary consolidation before the next leg higher, especially as the stock remains well below its 52-week high. Key technical levels to watch include support near the 52-week low of $180.27, which if broken could trigger further downside, and resistance around the 52-week high of $284.87, with intermediate resistance near the $240 level where the stock recently peaked. The beta of 0.766 indicates that the stock is less volatile than the broader market, which may appeal to risk-averse investors but also means it could lag in a strong bull market. A breakout above $240 would confirm the recovery trend, while a breakdown below $200 would signal a retest of the lows.
Beta
0.77
0.77x market volatility
Max Drawdown
-37.8%
Largest decline past year
52-Week Range
$180-$285
Price range past year
Annual Return
-15.4%
Cumulative gain past year
| Period | RMD Return | S&P 500 |
|---|---|---|
| 1m | +2.2% | -2.4% |
| 3m | +23.2% | +2.2% |
| 6m | +0.9% | +14.8% |
| 1y | -15.4% | +14.6% |
| ytd | -6.3% | +11.1% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
RMD Fundamental Analysis
ResMed's revenue trajectory remains robust, with the most recent quarter (Q3 2026, ended March 31, 2026) reporting revenue of $1.431 billion, representing a year-over-year growth rate of 10.81%. This continues a multi-quarter trend of steady growth, as revenue increased from $1.292 billion in Q3 2025 to $1.428 billion in Q2 2026 and $1.431 billion in Q3 2026. The sleep and respiratory segment generated $1.256 billion, while the residential care software segment contributed $166.87 million, with the latter showing potential for higher-margin recurring revenue. The consistent top-line expansion, driven by increasing diagnosis of sleep apnea and a growing installed base, supports a positive investment case, though the growth rate has moderated from prior peaks. Profitability is strong, with net income of $398.73 million in Q3 2026 and a net margin of 27.86%, while the gross margin stands at 62.25%, up from 59.33% in the prior-year quarter. This margin expansion reflects favorable product mix, pricing power, and operating leverage, as operating margin also improved to 34.92% from 33.00% a year ago. The company's ability to consistently generate net income above $390 million per quarter demonstrates robust profitability and efficient cost management. The balance sheet is exceptionally healthy, with a debt-to-equity ratio of just 0.125 and a current ratio of 3.10, indicating ample liquidity and minimal financial leverage. Free cash flow for the trailing twelve months is $1.748 billion, providing significant flexibility for dividends, share repurchases, and strategic acquisitions like Noctrix Health. The return on equity of 23.13% and return on assets of 14.00% highlight management's effectiveness in generating returns from both equity and asset bases, while the low debt burden reduces financial risk.
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
Open an Account, get $2 TSLA now!
Valuation Analysis: Is RMD Overvalued?
Since ResMed is profitable with positive net income, the PE ratio is the primary valuation metric. The trailing PE is 18.67x, while the forward PE is 16.50x, indicating that the market expects earnings growth to bring the multiple down. This gap suggests that analysts anticipate continued earnings expansion, likely driven by revenue growth and margin improvement. Compared to the industry average, ResMed's PE of 18.67x is below the broader healthcare sector average, which typically ranges from 20x to 25x, implying a discount. The PS ratio of 4.99x and EV/EBITDA of 12.84x also suggest a reasonable valuation relative to peers, especially given the company's strong margins and growth prospects. The PEG ratio of 2.00, however, indicates that the stock may be fully valued relative to its expected earnings growth rate. Historically, ResMed's PE ratio has ranged from a low of around 18x to a high of over 49x in the past five years, with the current 18.67x near the lower end of that range. This suggests that the stock is trading at a valuation discount compared to its own history, potentially offering a value opportunity if fundamentals continue to improve. The current PS ratio of 4.99x is also well below the historical peak of over 40x, further supporting the notion that the stock is not expensive by historical standards.
PE
18.7x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 21x~50x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
12.8x
Enterprise Value Multiple
Investment Risk Disclosure
ResMed's financial risks are relatively low given its healthy balance sheet, with a debt-to-equity ratio of 0.125 and a current ratio of 3.10. However, the company faces margin pressure from potential pricing competition in the flow generator market, as evidenced by the gross margin improvement to 62.25% but still below historical peaks. Revenue concentration in the Americas (roughly two-thirds) exposes it to regional reimbursement changes and healthcare policy shifts. Additionally, the company's growth relies on continued diagnosis and treatment of sleep apnea, and any slowdown in diagnosis rates could impact revenue growth, which moderated to 10.81% YoY in Q3 2026 from higher levels in prior years.
Market and competitive risks include the threat of new entrants or disruptive technologies in the sleep apnea device market, which could erode ResMed's market share. The stock's beta of 0.766 indicates lower volatility than the market, but it may still be sensitive to sector rotation, especially if investors favor higher-growth sectors. Recent analyst downgrades from Citigroup and Morgan Stanley highlight concerns about competitive dynamics and valuation, which could lead to further multiple compression. The wide analyst target range ($175-$320) reflects high uncertainty, and any negative news on reimbursement or competitive pricing could trigger a sell-off.
The worst-case scenario would involve a combination of slowing revenue growth, margin compression, and competitive losses, leading to a decline toward the 52-week low of $180.27 or the analyst low target of $175. From the current price of $218.27, this represents a downside of approximately 17.4% to 19.8%. If the stock breaks below the 52-week low, it could retest the max drawdown level of -37.76% from its high, implying a potential drop to around $177 (based on the 52-week high of $284.87). Such a scenario could be triggered by a significant earnings miss, loss of a major contract, or a broader market downturn that compresses healthcare multiples.
FAQ
The key risks for RMD include: 1) Competitive pressures in the sleep apnea device market, which could lead to market share loss and margin erosion, as reflected in the recent analyst downgrades; 2) Integration risks from acquisitions like Noctrix Health, which may not deliver expected synergies; 3) Macroeconomic sensitivity, as the stock's beta of 0.766 indicates lower volatility but still exposure to healthcare sector rotation; 4) Valuation risk, as the PEG ratio of 2.00 suggests limited upside if growth disappoints. The most severe risk is a combination of slowing growth and margin compression, which could drive the stock toward the 52-week low of $180.27.
Our 12-month forecast for RMD includes three scenarios: Bull case (25% probability) with a target range of $280-$320, driven by successful acquisition integration and accelerating growth; Base case (55% probability) with a target range of $240-$260, assuming steady 10-11% revenue growth and margin stability; Bear case (20% probability) with a target range of $175-$190, reflecting competitive pressures and margin compression. The base case is most likely, hinging on the company meeting analyst estimates and maintaining its growth trajectory. The key assumption is that revenue growth remains above 10% and gross margins stay above 62%.
RMD appears undervalued relative to its own history and the broader healthcare sector. The trailing PE of 18.67x is near the low end of its 5-year range (18x-49x) and below the sector average of 20x-25x. The forward PE of 16.50x suggests the market expects earnings growth to bring the multiple down further. However, the PEG ratio of 2.00 indicates the stock is fully valued relative to its growth rate, implying that the market is pricing in continued double-digit earnings growth. Overall, the valuation is attractive but not deeply discounted, and the market expects ResMed to execute on its growth and margin expansion plans.
From a risk/reward perspective, RMD appears attractive for long-term investors. The stock trades at a trailing PE of 18.67x, below the healthcare sector average of 20x-25x, and offers a 12.9% upside to the analyst average target of $246.44. The company's strong fundamentals, including 10.81% revenue growth and a 27.86% net margin, support the bull case. However, the biggest downside risk is a break below the 52-week low of $180.27, which would represent a 17.4% decline from current levels. For investors with a medium to long-term horizon and tolerance for volatility, RMD is a good buy, especially on dips near $200.
RMD is more suitable for long-term investment due to its stable growth profile, low beta of 0.766, and consistent dividend yield of 1.24%. The company's earnings visibility is high, supported by a structurally growing market and recurring revenue from software and masks. Short-term trading may be challenging given the stock's recent volatility and wide analyst target range. A minimum holding period of 2-3 years is recommended to ride out potential short-term fluctuations and benefit from the company's long-term growth and margin expansion. The stock's defensive characteristics make it a good candidate for a core healthcare holding in a diversified portfolio.