Zai Lab and ResMed shares added to Goldman’s Conviction List

On Monday, Zai Lab Limited (NASDAQ:ZLAB) and ResMed (NYSE:RMD) were included in Goldman Sachs’ APAC Director’s Cut Conviction List, signaling a positive outlook for both companies from the investment bank. ResMed, currently valued at $34.3 billion, demonstrates strong financial health with a perfect Piotroski Score of 9, according to InvestingPro data. Zai Lab is recognized for its transition from a China-only, licensing-based model to a dual engine strategy of in-house development and licensing, focusing on global opportunities. This shift is supported by a robust portfolio of over ten late-stage assets and a growing international pipeline, with ZL-1310, an antibody drug conjugate targeting DLL3, poised to enhance Zai Lab’s global market presence.

ResMed, known as a leading manufacturer of CPAP devices and masks for treating Obstructive Sleep Apnea (OSA), has been added to the Conviction List based on several key factors. The company is expected to experience strong patient growth in Continuous Airway Pressure Therapy due to increased awareness of OSA. With a robust gross profit margin of 59% and return on equity of 26%, ResMed has demonstrated strong operational efficiency. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculations, while maintaining a 13-year streak of consecutive dividend increases. The forecast suggests approximately 10/15% compound annual growth rate (CAGR) for group revenue and non-GAAP net income, respectively, from FY24 to FY27E.

Goldman Sachs’ inclusion of Zai Lab and ResMed in its Conviction List reflects the firms’ confidence in the companies’ strategies and growth potential. Zai Lab’s focus on a global market approach and ResMed’s strong positioning in the CPAP market, combined with expected revenue and net income growth, contribute to their favorable assessment by the investment bank.

The acknowledgment by Goldman Sachs serves as a positive indicator for investors and highlights the potential of both Zai Lab and ResMed in their respective sectors. As the companies continue to execute their strategic plans, their positioning on the Conviction List suggests a belief in their capacity to deliver value and growth in the coming years. ResMed’s strong financial position is further evidenced by its healthy current ratio of 3.33 and moderate debt levels. For deeper insights into ResMed’s valuation and growth potential, including 12 additional ProTips and comprehensive financial analysis, investors can access the full Pro Research Report available on InvestingPro.

In other recent news, ResMed Inc . reported its Q2 FY2025 earnings, surpassing analyst expectations with an earnings per share (EPS) of $2.43, exceeding the forecasted $2.32. The company also exceeded revenue projections, posting $1.28 billion compared to the anticipated $1.27 billion. Despite these strong earnings, ResMed’s stock experienced a decline in after-hours trading. The company demonstrated a 10% increase in group revenue year-over-year, maintaining a robust cash flow and declaring a quarterly dividend of $0.53 per share. ResMed’s strategic focus on innovation and digital health solutions is evident with the launch of new products like the AirTouch N30i and collaborations with companies such as Apple (NASDAQ:AAPL). The company continues to invest in technology, including AI, to enhance its product offerings. Looking ahead, ResMed expects gross margins to be between 59% and 60% in the second half of FY2025, while continuing to target empowering 500 million people by 2030.

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