ResMed (RMD) Stock Forecast & Price Target

ResMed's strong financial performance is underscored by a gross margin of 62.3%, which surpassed consensus estimates by 40 basis points, coupled with an impressive operating margin of 36.3%, exceeding expectations by 70 basis points, indicating effective execution of productivity initiatives. The company reported stable growth in key product segments, with mask sales increasing by 16% year-on-year on a constant currency basis, while overall revenue growth is driven by strong performance in the Americas, which constitutes about two-thirds of total revenue. Additionally, the upward revision of gross margin guidance for fiscal 2026 to a midpoint of 62.5% further reflects ResMed’s positive outlook amidst growing market demand for respiratory care solutions.

ResMed's management has revised its FY26 growth outlook downward, now expecting growth in the mid-single digits rather than the previously anticipated high single digits, indicating potential challenges in sustaining revenue momentum. Additionally, despite a projected increase in FY26 EPS estimates, operational expenses are expected to rise without leveraging the anticipated revenue growth, which may lead to concerns about profitability. Moreover, the competitive dynamics in the respiratory care market are shifting, with signs that GLP-1 drugs could disrupt traditional Positive Airway Pressure (PAP) volumes, compounded by Philips' re-entry into the market, raising uncertainties about ResMed’s market share in the future.