Dj Resmed Price Target Raised To $280.00/Share From $266.00 By Keybanc

Investing.com -- Shares of ResMed (NYSE:RMD) fell 6% today, despite the company reporting second-quarter earnings that surpassed analyst expectations. The medical equipment maker posted earnings per share (EPS) of $2.43, which was $0.11 higher than the analyst estimate of $2.32. Revenue for the quarter reached $1.28 billion, exceeding the consensus estimate of $1.27 billion.

The decline in stock value comes as analysts express mixed views on the company's quarterly performance. While ResMed achieved a 10% revenue increase compared to the same quarter last year, some market observers remain cautious due to external factors that could affect the company's future growth.

ResMed's second-quarter results, released on January 30, 2025, demonstrated strong financial health, with a 10% year-over-year (YoY) increase in revenue and a significant improvement in gross margin by 300 basis points to 58.6%. The non-GAAP gross margin also saw a rise of 230 basis points to 59.2%. The company's income from operations surged by 52%, and non-GAAP income from operations grew by 19%.

The company's CEO, Mick Farrell, attributed the robust performance to heightened demand for ResMed's sleep health and breathing health products, as well as its digital health solutions. He also noted the company's focus on operational excellence and the positive impact of consumer wearables that track sleep health, along with the use of GLP-1 therapies.

Despite the positive results, analysts provided varied outlooks. Needham analyst Mike Matson (NYSE:MATX) maintained a Hold rating on ResMed, acknowledging the company's revenue and EPS beat but pointing out the risks posed by recent FDA approval of a GLP-1 drug for obstructive sleep apnea (OSA) and Medicare's plans to cover the drug for OSA. Matson stated, "Given the risk posed by the recent FDA approval of the first GLP-1 drug for obstructive sleep apnea (OSA) and Medicare's plans to cover the drug for OSA and RMD's valuation, we maintain our Hold rating."

Oppenheimer analyst Suraj Kalia reiterated a Perform rating, noting that while the GLP-1s don't pose an immediate threat, the situation could change with more drugs likely to become first-line therapy for obese OSA patients. Piper Sandler analyst Adam Maeder, while raising the price target, maintained a Neutral rating, adopting a wait-and-see approach to the stock given the current valuation levels. Stifel analyst Jonathan Block also reiterated a Hold rating, pointing out that some business segments may have fallen slightly below expectations. RBC Capital analyst Craig Wong-Pan, who raised the price target, maintained a Sector Perform rating, suggesting that the positive outlook might already be reflected in the share price.

ResMed's stock movement today reflects a complex market sentiment that weighs the company's strong quarterly performance against broader industry developments and potential challenges on the horizon.

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