ResMed
RMD
$238.97
-1.35%
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 settings. The company operates in the Medical Instruments & Supplies industry and is distinctively positioned as a dominant platform player, controlling a substantial share of the sleep apnea device market while increasingly differentiating itself through digital health solutions that provide clinical data to patients, providers, and payers. The current investor narrative centers on ResMed's ability to sustain double-digit mask and accessory growth, execute strategic tuck-in acquisitions like the $340 million purchase of Noctrix Health for a first-in-class restless legs syndrome therapy, and navigate competitive pressures in the flow generator market. Recent headlines highlight a mixed sentiment, with Zacks noting strong mask segment growth and strategic divestitures as positives but maintaining a hold rating due to competitive pressures, while institutional actions show RBC Capital upgrading the stock to Outperform in September 2026, signaling growing confidence in the company's long-term growth trajectory.…
RMD
ResMed
$238.97
Related headlines
Investment Opinion: Should I buy RMD Today?
Based on the synthesis of data, ResMed earns a Hold rating with a positive bias. The analyst consensus is Buy with an average target price of $250.22, implying 8.8% upside, but the recent gross margin compression and competitive pressures warrant caution. The company's strong free cash flow of $1.65 billion and low debt-to-equity of 0.125 support financial stability, while the trailing PE of 18.67x is near historical lows, suggesting limited downside. However, the PEG ratio of 2.00 indicates the stock is not cheap relative to growth, and the wide analyst target range ($175-$320) reflects uncertainty. The rating would upgrade to Buy if gross margins stabilize above 60% and revenue growth accelerates above 10%, or downgrade to Sell if margins fall below 58% or revenue growth decelerates below 5%. Overall, the stock appears fairly valued, trading at a discount to its historical PE but with growth challenges.
Sign up to view all
RMD 12-Month Price Forecast
ResMed presents a balanced risk-reward profile. The company's strong cash flow, low leverage, and discounted valuation relative to history are offset by margin compression and competitive pressures. The analyst consensus is moderately bullish, but the wide target range reflects uncertainty. I would upgrade to bullish if gross margins stabilize and revenue growth accelerates, and downgrade to bearish if margin erosion continues or competitive losses mount. The stock is likely to trade in a range until there is clearer evidence of margin recovery or growth acceleration.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on ResMed's 12-month outlook, with a consensus price target around $251.99 and implied upside of +5.5% versus the current price.
Average Target
$251.99
0 analysts
Implied Upside
+5.5%
vs. current price
Analyst Count
—
covering this stock
Price Range
$175 - $320
Analyst target range
ResMed is covered by 17 analysts, with a consensus recommendation of Buy (recommendation mean of 2.3 on a scale where 1 is Strong Buy and 5 is Strong Sell). The average target price is $250.22, which implies an upside of approximately 8.8% from the current price of $230.05. The consensus leans bullish, with the majority of analysts likely rating the stock a Buy or Outperform, as evidenced by recent upgrades such as RBC Capital's move to Outperform in September 2026. However, the recommendation mean of 2.3 suggests a moderate buy rather than a strong conviction, and the presence of Neutral and Hold ratings from firms like Citigroup, Piper Sandler, and Jefferies indicates a balanced view. The target price range spans from a low of $175.00 to a high of $320.00, representing a wide spread of 82.9% between the low and high targets. The high target of $320.00 implies a 39.1% upside and likely assumes successful execution of growth initiatives, margin expansion, and perhaps multiple expansion as the market recognizes the company's digital health transformation. The low target of $175.00 implies a 23.9% downside and likely prices in margin compression, competitive losses, or a broader market downturn. The wide spread signals high uncertainty among analysts, which is consistent with the competitive pressures and regulatory overhang in the sleep apnea market. Recent institutional actions show a mix of upgrades and downgrades, with RBC Capital upgrading to Outperform in September 2026, while Citigroup downgraded to Neutral in July 2026, indicating divergent views on the company's near-term prospects. The estimated EPS average of $15.62 for the upcoming fiscal year, with a range of $15.21 to $16.14, provides a foundation for valuation, and the estimated revenue average of $7.06 billion suggests modest growth expectations.
Drowning in data?
Find the real signal!
Bulls vs Bears: RMD Investment Factors
The bull case for ResMed rests on its strong cash flow generation, consistent revenue growth, attractive valuation relative to history, and defensive characteristics. The bear case centers on the stock's significant underperformance, recent gross margin compression, high PEG ratio, and competitive pressures. Currently, the bear evidence appears slightly stronger due to the margin decline and negative relative strength, but the bull case is supported by solid fundamentals and analyst optimism. The most critical tension is whether ResMed can sustain its growth trajectory and reverse the margin compression; if gross margins stabilize and growth accelerates, the stock could re-rate higher, but continued margin erosion could keep the stock range-bound.
Bullish
- Strong FCF and balance sheet: ResMed generated $1.65 billion in free cash flow in fiscal 2026, with a debt-to-equity ratio of only 0.125 and a current ratio of 3.10. This provides ample liquidity for growth initiatives, dividends, and share repurchases.
- Consistent revenue growth: Revenue grew 8.58% year-over-year in Q4 2026 to $1.464 billion, continuing a multi-quarter trend of steady expansion. The Sleep and Respiratory segment dominates with $1.256 billion in revenue, driven by increasing sleep apnea diagnosis rates and a growing installed base.
- Attractive valuation vs history: The trailing PE of 18.67x is near the low end of its historical range (high of 49.69x in Q3 2022), and the forward PE of 17.39x implies modest earnings growth expectations. The price-to-book ratio of 4.28 is also near multi-year lows.
- Analyst consensus and upside: 17 analysts rate the stock a Buy with an average target price of $250.22, implying 8.8% upside from the current price of $230.05. The high target of $320 suggests 39.1% upside if growth initiatives succeed.
Bearish
- Significant underperformance: The stock is down 17.21% over the past year, vastly underperforming the S&P 500's 16% gain, resulting in a relative strength of -33.21%. This reflects persistent concerns about competitive pressures and slowing growth.
- Gross margin compression: Gross margin declined from 62.25% in Q3 2026 to 58.84% in Q4 2026, a 341 basis point drop. This compression, if sustained, could pressure profitability and indicate pricing or mix challenges.
- High PEG ratio: The PEG ratio of 2.00 suggests the stock is trading at a premium relative to its earnings growth rate. With an estimated EPS growth of only 6.9% embedded in the forward PE, the valuation may not fully reflect growth prospects.
- Wide analyst target dispersion: Analyst targets range from $175 to $320, an 82.9% spread, indicating high uncertainty. The low target implies 23.9% downside, reflecting risks such as margin compression or competitive losses.
RMD Technical Analysis
ResMed is in a recovery phase within a broader downtrend, with the stock down 17.21% over the past year but showing signs of stabilization. The current price of $230.05 sits at approximately 51% of its 52-week range of $180.27 to $277.85, placing it in the middle of its annual trading band. This positioning suggests the stock is neither overextended nor deeply undervalued, but rather in a neutral zone where the market is reassessing its growth prospects after a significant drawdown from the highs. The 1-year relative strength versus SPY is -33.21%, indicating substantial underperformance compared to the broader market, which has gained 16% over the same period. Recent momentum has turned positive, with a 1-month gain of 4.59% and a 3-month gain of 12.84%, both outpacing the S&P 500's respective gains of 2.12% and 3.13%. This acceleration in short-term performance contrasts with the negative 1-year trend, potentially signaling a trend reversal or at least a meaningful mean-reversion rally. The 6-month change of just 0.52% and YTD decline of 6.03% further underscore that while the stock has stabilized, it has not yet reclaimed its prior highs. The relative strength over 3 months is +9.71%, showing that ResMed has recently outperformed the market, which could attract momentum-oriented investors. Key technical levels to watch include support at the 52-week low of $180.27, which if breached could trigger further selling pressure, and resistance at the 52-week high of $277.85, a breakout above which would signal a full recovery and potential new uptrend. The stock's beta of 0.75 indicates it is 25% less volatile than the broader market, making it a relatively defensive holding that may appeal to risk-averse investors but could lag in strong bull markets. The maximum drawdown of -35.46% over the past year highlights the significant risk that has been realized, and position sizing should account for this historical volatility.
Beta
0.75
0.75x market volatility
Max Drawdown
-35.5%
Largest decline past year
52-Week Range
$180-$278
Price range past year
Annual Return
-11.5%
Cumulative gain past year
| Period | RMD Return | S&P 500 |
|---|---|---|
| 1m | +4.7% | +1.2% |
| 3m | +20.1% | +2.7% |
| 6m | +4.8% | +7.5% |
| 1y | -11.5% | +15.5% |
| ytd | -2.4% | +11.9% |
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 solidly growth-oriented, with the most recent quarter (Q4 2026, ended June 30, 2026) generating $1.464 billion in revenue, representing an 8.58% year-over-year increase. This continues a multi-quarter trend of consistent growth, as revenue has risen from $1.225 billion in Q1 2025 to $1.464 billion in Q4 2026, reflecting a compound quarterly growth pattern. The Sleep and Respiratory segment dominates with $1.256 billion in revenue, while the Residential Care Software segment contributes $166.87 million, indicating that the core device business remains the primary growth engine. The steady top-line expansion, driven by increasing sleep apnea diagnosis rates and a growing installed base of devices requiring replacement masks and accessories, supports a positive long-term investment case, though the growth rate has moderated from the high-teens seen in prior years. Profitability remains robust, with Q4 2026 net income of $383.43 million and a net margin of 26.20%, while the gross margin stands at 58.84% for the quarter. The company has demonstrated consistent profitability, with net income exceeding $348 million in each of the last five quarters, and operating margins have remained healthy, ranging from 30.66% to 34.97% over the same period. The gross margin has fluctuated slightly but remains above 58%, which is strong for the medical device industry, reflecting pricing power and a favorable product mix. The slight compression in gross margin from 62.25% in Q3 2026 to 58.84% in Q4 2026 warrants monitoring, but overall profitability metrics remain impressive. ResMed's balance sheet is exceptionally strong, with a debt-to-equity ratio of just 0.125 and a current ratio of 3.10, indicating ample liquidity and minimal leverage. The company generated $1.81 billion in operating cash flow and $1.65 billion in free cash flow in fiscal 2026, providing substantial internal funding for growth initiatives, dividends, and share repurchases. The return on equity of 23.13% and return on assets of 14.00% demonstrate efficient capital deployment, while the free cash flow per share of $11.40 and operating cash flow per share of $12.48 highlight the cash-generative nature of the business. With $1.47 billion in cash at the end of the period and a cash flow to debt ratio of 2.19, ResMed has significant financial flexibility and poses low financial risk.
Quarterly Revenue
$1.5B
2026-06
Revenue YoY Growth
+8.6%
YoY Comparison
Gross Margin
58.8%
Latest Quarter
Free Cash Flow
$2.9B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is RMD Overvalued?
Given that ResMed is profitable with a trailing net income of $1.52 billion, the PE ratio is the appropriate primary valuation metric. The trailing PE ratio is 18.67x, while the forward PE is 17.39x, implying a modest 6.9% earnings growth expectation embedded in the forward multiple. This relatively small gap between trailing and forward PE suggests the market is not pricing in aggressive near-term earnings acceleration, which could be a conservative setup if the company outperforms. Compared to the broader healthcare sector, ResMed's PE of 18.67x appears reasonable, though a direct industry average is not provided in the data; however, the medical device industry typically trades at a premium, often in the 20-25x range, suggesting ResMed may be trading at a discount to peers. The PEG ratio of 2.00 indicates that the stock is trading at a premium relative to its earnings growth rate, which could be a concern for growth-oriented investors. The price-to-sales ratio of 4.99 and EV/EBITDA of 12.80 are also moderate, reflecting a valuation that is not stretched. Historically, ResMed's PE ratio has ranged from a low of 18.38x in Q4 2026 to a high of 49.69x in Q3 2022, with the current 18.67x sitting near the bottom of that multi-year range. This suggests that the stock is currently valued at the lower end of its historical band, potentially offering a value opportunity if fundamentals remain intact. The price-to-book ratio of 4.28 is also near the low end of its historical range, which has been as high as 12.69x in Q1 2022, further supporting the notion that the stock is not expensive relative to its own history. However, the low valuation could also reflect market concerns about competitive pressures and slowing growth, so investors should weigh the potential value against these risks.
PE
18.7x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 18x~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 strong balance sheet, with a debt-to-equity ratio of 0.125 and a current ratio of 3.10. However, the recent gross margin compression from 62.25% to 58.84% in Q4 2026 is a concern, as it may indicate pricing pressure or unfavorable product mix. Additionally, the company's revenue is concentrated in the Sleep and Respiratory segment, which accounted for $1.256 billion of the $1.464 billion in Q4 2026 revenue, exposing it to competitive dynamics in that market. The high short ratio of 10.58 suggests that short sellers are betting against the stock, potentially amplifying volatility. Market and competitive risks include the potential for valuation compression if growth slows, as the PEG ratio of 2.00 already prices in moderate growth. The stock's beta of 0.75 indicates lower volatility than the market, but it also means it may lag in strong bull markets. Regulatory changes or reimbursement pressures in the healthcare sector could impact demand for sleep apnea devices. Recent news highlights competitive pressures in the flow generator market, and analyst targets range widely from $175 to $320, reflecting uncertainty. The worst-case scenario would involve a combination of margin erosion, competitive share loss, and a broader market downturn, leading to a decline to the 52-week low of $180.27, representing a 21.6% drop from the current price of $230.05. If analyst bear-case target of $175 is reached, the downside would be 23.9%. Given the maximum drawdown of -35.46% over the past year, investors could face significant losses in adverse conditions.
FAQ
The key risks include: 1) Financial risk from gross margin compression, which fell from 62.25% to 58.84% in Q4 2026, potentially reducing profitability. 2) Competitive risk in the flow generator market, where rivals could erode ResMed's market share and pricing power. 3) Macro risk due to the stock's beta of 0.75, which while defensive, may underperform in strong bull markets, and healthcare sector rotation could pressure the stock. 4) Company-specific risk from the wide analyst target range ($175-$320), indicating uncertainty about growth prospects. The high short ratio of 10.58 also suggests bearish sentiment. These risks could lead to a decline to the 52-week low of $180.27, a 21.6% drop.
The 12-month forecast has three scenarios: Bull case (25% probability) targets $280-$320, assuming successful integration of Noctrix Health, margin recovery, and multiple expansion. Base case (55% probability) targets $240-$260, assuming steady mid-single-digit revenue growth and stable margins, aligning with the analyst average target of $250.22. Bear case (20% probability) targets $175-$200, assuming intensifying competition, margin compression, and a market downturn. The base case is most likely, hinging on ResMed maintaining its market leadership and gradually improving margins. Key catalysts include the next earnings report and the commercial success of new products.
ResMed appears fairly valued to slightly undervalued relative to its history. The trailing PE of 18.67x is near the low end of its multi-year range (high of 49.69x in Q3 2022), and the price-to-book ratio of 4.28 is also near historical lows. However, the PEG ratio of 2.00 suggests a premium relative to its earnings growth rate. Compared to the broader medical device industry, which often trades at 20-25x earnings, ResMed may be at a discount. The market seems to be pricing in modest growth expectations, with a forward PE of 17.39x implying only 6.9% earnings growth. If the company can accelerate growth, the valuation could expand.
ResMed could be a good buy for long-term investors seeking a defensive healthcare stock with a 1.24% dividend yield and a beta of 0.75. The stock trades at a trailing PE of 18.67x, near its historical low, and analysts have a Buy consensus with an average target of $250.22, implying 8.8% upside. However, the recent gross margin decline to 58.84% and competitive pressures are concerns. The risk-reward is balanced: potential upside to $320 (39.1%) if growth accelerates, but downside to $175 (23.9%) if margins compress further. It may be suitable for investors with a medium to long-term horizon who can tolerate near-term volatility.
ResMed is more suitable for long-term investment due to its defensive characteristics (beta 0.75), consistent dividend (yield 1.24%), and strong fundamentals (ROE 23.13%, free cash flow $1.65 billion). The stock's recent volatility (max drawdown -35.46% over the past year) and competitive pressures make it less ideal for short-term trading. Long-term investors can benefit from the growing sleep apnea market and the company's digital health initiatives. A minimum holding period of 2-3 years is suggested to ride out near-term fluctuations and allow for potential margin recovery and growth acceleration. Short-term traders might find opportunities around earnings announcements, but the stock's low beta may limit quick gains.
