ResMed: Inc 1Q in line - cost base reset; mkt dynamics unchanged

About the author:

Dr Derek Jellinek
Author name:
By Dr Derek Jellinek
Job title:
Senior Analyst
Date posted:
30 October 2023, 7:30 AM
Sectors Covered:

  • ResMed Inc's (ASX:RMD) 1Q was broadly in line, with double-digit top-line growth and sequential improvement in operating leverage.
  • Mask growth was a standout, supported by resupply and new patient setups at all-time highs, while device growth was somewhat tempered on tough comps.
  • Management presented an epidemiological model of global OSA prevalence through 2050, suggesting while weight-loss drugs could shave up to c15% off TAM (worst case) the market would remain large (1.2bn) and underpenetrated (<10%).
  • Sequential GPM improvement is encouraging, with restructuring and unwinding the Primasun JV resetting the cost base and accelerating profitable growth.
  • We adjust FY24-26 forecasts modestly, with our DCF/SOTP based target price decreasing to (login to view) mostly on DCF assumption changes. Add rating maintained.

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