ResMed (RMD) Stock Forecast & Price Target

ResMed demonstrated strong financial performance in its latest quarter, with gross margin reaching 62.3%, exceeding consensus estimates by 40 basis points, and an operating margin of 36.3%, surpassing estimations by 70 basis points. The company reported earnings per share (EPS) of $2.81, which outperformed both market expectations and prior estimates due in part to favorable foreign exchange impacts. With a solid revenue growth of 16% year-over-year in mask sales and a positive outlook for future gross margins, ResMed's financial metrics indicate resilience and potential for continued growth in the expanding respiratory care market.

ResMed recently lowered its FY26 growth outlook for its segment, revising expectations from a +MSD-HSD% increase to just +MSD%, indicating a deterioration in growth prospects. Operating expenses are unlikely to demonstrate leverage despite a forecasted +HSD% revenue growth for FY26, which raises concerns about profitability amid the projected revenue increases. Additionally, the weak performance in international device sales and growing competition from companies like Philips, along with potential disruptions from GLP-1 drugs affecting PAP volumes, contribute to a cautious outlook for ResMed's stock.