Mizuho cuts ResMed stock price target to $250 from $265

On Thursday, Mizuho (NYSE:MFG) Securities maintained its Outperform rating on ResMed (NYSE:RMD), a $31.4 billion medical device company with a perfect Piotroski Score of 9 according to InvestingPro, but reduced the stock’s price target to $250 from the previous $265. Based on InvestingPro’s Fair Value analysis, the stock currently appears to be undervalued. The adjustment followed ResMed’s third-quarter results for March, which were in line with expectations. The decrease in Global Devices revenue, which fell short by $6 million compared to the Street’s forecast, was counterbalanced by a higher-than-expected performance in Continuous Positive Airway Pressure (CPAP) re-supply revenue, exceeding Street estimates by $5 million. The company maintains strong financial metrics, with InvestingPro data showing a healthy current ratio of 3.33 and moderate debt levels with a debt-to-equity ratio of just 0.16.

The company also reported a gross margin beat, with a 50 basis point advantage over expectations, contributing to ResMed’s impressive gross margin of 59.02% over the last twelve months. This positive outcome was partly attributed to the company’s exemption from certain global tariffs. Want deeper insights into ResMed’s financial health? Access the comprehensive Pro Research Report, along with 12 additional exclusive InvestingPro Tips, by visiting InvestingPro. In early April, the U.S. Customs & Border Protection confirmed that CPAP solutions and accessories would continue to benefit from the Nairobi Protocol exemption, implying minimal to no impact from tariffs on the company’s profit and loss statement in the near term, barring any significant policy changes.

During the earnings call for the third quarter ended in March, ResMed highlighted two significant updates regarding its GLP-1 strategy. First, the company has intensified educational efforts aimed at the top 10% of GLP-1 prescribers. Second, preliminary data indicates that continuing medical education (CME) initiatives at targeted GLP-1 sites are yielding a positive return on investment through new CPAP patient starts.

Mizuho’s analysis suggests that ResMed is well-positioned regarding tariff regulations and has found no signs of market cannibalization from GLP-1 products. Consequently, the firm has reaffirmed its positive outlook on ResMed’s stock with the Outperform rating.

In other recent news, ResMed has reported its third-quarter fiscal year 2025 earnings, revealing a notable increase in revenue and earnings per share. The company’s revenue reached $1.3 billion, marking an 8% increase year-over-year and surpassing the forecast of $1.29 billion. Earnings per share came in at $2.37, slightly below the anticipated $2.39, but still reflecting an 11% increase from the previous year. ResMed’s gross margin improved significantly, reaching 59.9%, up 140 basis points, driven by manufacturing and logistics efficiencies.

Oppenheimer has maintained its Perform rating on ResMed, acknowledging the company’s strong financial performance and the absence of material impact from tariffs. The firm noted that ResMed is expected to benefit from industry trends, such as increased awareness of sleep health and the use of sleep wearables. However, Oppenheimer cautioned that GLP-1 medications could pose a long-term challenge to ResMed’s CPAP device business, particularly if new drugs are approved for obstructive sleep apnea.

Looking ahead, ResMed plans to expand its manufacturing capabilities in the United States with a new plant in Calabasas, California, set to open in June 2025. The company is also exploring mergers and acquisitions to further expand its patient diagnostic and treatment capabilities. ResMed continues to invest in digital health and new product launches, aiming to maintain its leadership in the global sleep health market.

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