ResMed (RMD) Stock Forecast & Price Target

ResMed has demonstrated a solid financial performance with a gross margin of 62.3%, surpassing consensus estimates by 40 basis points, and has increased the lower bound of its FY26 gross margin guidance to 62-63%. The company reported an impressive earnings per share (EPS) of $2.81, exceeding prior estimates, driven by strong operational margins of 36.3% and consistent growth in mask sales, which maintained a double-digit growth profile. Additionally, ongoing efficiency and cost-cutting initiatives position ResMed favorably within a growing market, driven by increasing sleep apnea diagnoses and an expanding global patient base.

ResMed management has adjusted its FY26 growth outlook for the segment to a mid-single-digit percentage increase, down from the previously anticipated high single-digit percentage growth, indicating a more cautious approach to future revenue expectations. Operating expenses are projected to not exhibit leverage despite expected revenue growth, which could further strain profitability. Additionally, concerns about competitive pressures, particularly from Philips as they re-enter the U.S. market, alongside potential disruptions from GLP-1 drugs impacting PAP volumes, suggest challenges that may lead to investor apprehension regarding ResMed’s financial stability and growth sustainability.