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ResMed: SDB Business Faces Risks, Reimbursement a Drag
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On Dec 27, we issued an updated research report on San Diego, CA-based ResMed, Inc. (RMD - Free Report) . The company is a global manufacturer and distributor of generators, masks, and related accessories for the treatment of sleep-disordered breathing (SDB) and other respiratory disorders. At present, the company’s line of products include airflow generators, diagnostic products, mask systems, headgear and other accessories.
In the greater part of the last six months, ResMed surpassed the Zacks categorized Medical Product industry with respect to price performance. Despite a dismal first-quarter fiscal 2017, the company managed to maintain the bullish trend on solid fundamentals and bright prospects. Overall, the company has lost 2.5%, much narrower than the 6.5% decline of the industry trend over the last six months. The company registered solid growth in the U.S. in the reported quarter, driven by strength in its software-as-a-service business from the recent buyout of Brightree. Its strong global device sales also buoy optimism.
Meanwhile, ResMed has been aiming to expand its base in international markets. Currently, the company invests in high growth markets like China, South Korea, India, Brazil and many countries in Eastern Europe. Notably, in these regions, ResMed is implementing long-term strategies to improve quality of patient life and reduce healthcare costs.
As part of its Three-Horizon Growth Strategy, ResMed has been witnessing strong growth in the sleep and ventilation device platforms. Per management, ResMed currently leads this market, with more than 2 million of 100% cloud-connected medical devices. To maintain its leadership position in the potential SDB market, ResMed is focusing on product development and innovation. In the last month, the company introduced the AirFit N20 nasal mask and AirFit F20 full face mask for positive airway pressure treatment of sleep apnea.
On the flip side, ResMed’s ability to sell its products largely depends on the extent to which coverage and reimbursement for its products will be available from government health administration authorities, private health insurers and other organizations. These third-party payers are increasingly raising objection against the prices charged for medical products and services and can deny coverage for treatments that may include the use of its products.
Also, the market for SDB products is highly competitive with respect to product price, features and reliability. Unfavorable foreign exchange continues to hinder ResMed’s sales overseas. Moreover, challenges like competitive bidding and rising operating expenses continue to plague the stock.
Zacks Rank & Key Picks
ResMed carries a Zacks Rank #4 (Sell). Better-ranked medical stocks are NxStage Medical Inc. , Align Technology, Inc. (ALGN - Free Report) and Haemonetics Corporation (HAE - Free Report) . NxStage Medical and Align Technology sport a Zacks Rank #1 (Strong Buy) while Haemonetics carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NxStage Medical gained 14.4% over the last one year compared with the S&P 500’s 9%. The company has a four-quarter average positive earnings surprise of 46.3%.
Align Technology rallied 47% year to date, way better than the S&P 500’s 10.1%. It has a trailing four-quarter average positive earnings surprise of 23%.
Haemonetics recorded a 23.7% gain year to date, better than the S&P 500. It has a trailing four-quarter average positive earnings surprise of 0.82%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
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ResMed: SDB Business Faces Risks, Reimbursement a Drag
On Dec 27, we issued an updated research report on San Diego, CA-based ResMed, Inc. (RMD - Free Report) . The company is a global manufacturer and distributor of generators, masks, and related accessories for the treatment of sleep-disordered breathing (SDB) and other respiratory disorders. At present, the company’s line of products include airflow generators, diagnostic products, mask systems, headgear and other accessories.
In the greater part of the last six months, ResMed surpassed the Zacks categorized Medical Product industry with respect to price performance. Despite a dismal first-quarter fiscal 2017, the company managed to maintain the bullish trend on solid fundamentals and bright prospects. Overall, the company has lost 2.5%, much narrower than the 6.5% decline of the industry trend over the last six months. The company registered solid growth in the U.S. in the reported quarter, driven by strength in its software-as-a-service business from the recent buyout of Brightree. Its strong global device sales also buoy optimism.
Meanwhile, ResMed has been aiming to expand its base in international markets. Currently, the company invests in high growth markets like China, South Korea, India, Brazil and many countries in Eastern Europe. Notably, in these regions, ResMed is implementing long-term strategies to improve quality of patient life and reduce healthcare costs.
As part of its Three-Horizon Growth Strategy, ResMed has been witnessing strong growth in the sleep and ventilation device platforms. Per management, ResMed currently leads this market, with more than 2 million of 100% cloud-connected medical devices. To maintain its leadership position in the potential SDB market, ResMed is focusing on product development and innovation. In the last month, the company introduced the AirFit N20 nasal mask and AirFit F20 full face mask for positive airway pressure treatment of sleep apnea.
On the flip side, ResMed’s ability to sell its products largely depends on the extent to which coverage and reimbursement for its products will be available from government health administration authorities, private health insurers and other organizations. These third-party payers are increasingly raising objection against the prices charged for medical products and services and can deny coverage for treatments that may include the use of its products.
Also, the market for SDB products is highly competitive with respect to product price, features and reliability. Unfavorable foreign exchange continues to hinder ResMed’s sales overseas. Moreover, challenges like competitive bidding and rising operating expenses continue to plague the stock.
Zacks Rank & Key Picks
ResMed carries a Zacks Rank #4 (Sell). Better-ranked medical stocks are NxStage Medical Inc. , Align Technology, Inc. (ALGN - Free Report) and Haemonetics Corporation (HAE - Free Report) . NxStage Medical and Align Technology sport a Zacks Rank #1 (Strong Buy) while Haemonetics carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NxStage Medical gained 14.4% over the last one year compared with the S&P 500’s 9%. The company has a four-quarter average positive earnings surprise of 46.3%.
Align Technology rallied 47% year to date, way better than the S&P 500’s 10.1%. It has a trailing four-quarter average positive earnings surprise of 23%.
Haemonetics recorded a 23.7% gain year to date, better than the S&P 500. It has a trailing four-quarter average positive earnings surprise of 0.82%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>