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On Thursday, RBC Capital Markets adjusted its outlook on ResMed (NYSE:RMD), a company specializing in medical equipment for treating sleep disorders, by increasing its price target to $255 from the previous $247. The firm has opted to maintain a Sector Perform rating on the stock. According to InvestingPro data, ResMed boasts a perfect Piotroski Score of 9, indicating exceptional financial strength, with analyst targets ranging from $200 to $295.
The decision by analyst Craig Wong-Pan at RBC Capital follows ResMed’s third-quarter fiscal year 2025 results, which exhibited sustained robust growth in both revenue and earnings. The company’s revenue grew 9.38% over the last twelve months to $4.93 billion, with a healthy gross profit margin of 59%. Although the results met market expectations, the company’s announcement that its products would largely remain exempt from U.S. import tariffs stood out as a significant positive development.
RBC Capital’s revised price target is a reflection of minor adjustments to their forecasts, underpinned by an anticipated positive earnings growth trajectory for ResMed. The tariff exemptions are likely to contribute to the company’s continued financial health, providing a buffer against potential cost increases that could have arisen from tariff impositions.
The analyst’s commentary highlighted the strength of ResMed’s third-quarter performance, emphasizing the company’s solid growth momentum. "Robust growth and tariff exemptions; RMD’s 3Q25 result showed ongoing solid growth in revenue and earnings, albeit they were in line with market expectations. However, a positive update was that the company’s products should continue to be largely exempt from US import tariffs. We have made minor increases to our forecasts and maintain a positive earnings growth outlook for the stock. Our forecast changes increase our PT to $255 (from $247). SP rating maintained," Wong-Pan stated.
ResMed’s stock performance and investor sentiment may be influenced by these developments, as the market processes the implications of the tariff exemptions and RBC Capital’s updated price target. Trading at a PEG ratio of 0.63, the stock appears attractively valued relative to its growth prospects. The company’s ability to navigate the current economic landscape while delivering consistent growth is a point of focus for investors and market watchers alike. Discover more detailed analysis and insights with InvestingPro’s comprehensive research report, available along with real-time metrics and expert analysis.
In other recent news, ResMed reported its third-quarter fiscal year 2025 earnings with revenue reaching $1.3 billion, surpassing forecasts of $1.29 billion. However, the company’s earnings per share (EPS) came in slightly below expectations at $2.37, compared to the forecasted $2.39. Piper Sandler responded by lowering its price target for ResMed to $248, maintaining a Neutral rating, while Mizuho (NYSE:MFG) also cut its target to $250 but kept an Outperform rating. In contrast, KeyBanc Capital Markets raised its price target to $274, citing strong performance in ResMed’s Masks & Accessories segment and favorable tariff conditions.
ResMed’s gross margin improved significantly, attributed to manufacturing and distribution efficiencies, with minimal expected impacts from tariffs due to exemptions under the Nairobi Protocol. Oppenheimer maintained a Perform rating, noting the company’s revenue exceeded estimates and EPS surpassed expectations. ResMed is expanding its U.S. presence with a new plant scheduled to open in 2025 and is investing in digital health and new product launches. Analysts are cautiously optimistic about ResMed’s ability to navigate potential challenges, such as competition from GLP-1 medications, which could impact the CPAP device market.
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