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ResMed (RMD) Hits a New 52-Week High: What's Driving It?
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ResMed Inc. (RMD - Free Report) scaled a new 52-week high of $242.50 on Jun 18, before closing the session marginally lower at $237.44.
The company’s shares have appreciated 32.5% over the past year, ahead of 14.9% growth of the industry it belongs to and 35.7% rise of the S&P 500 composite.
The company is witnessing an upward trend in its stock price, prompted by rising adoption of digital health solutions. Increased focus on international markets and strong demand for masks and other accessories. However, lower ventilator demand and a challenging macroeconomic scenario are concerning.
Lets’ delve deeper.
Factors at Play
Potential in Digital Health: Of late, ResMed has been focusing on digital health technology. The Brightree and MatrixCare software systems are significantly contributing to the company's capabilities of managing 90 million more people outside the hospital setting. During the fiscal third quarter, ResMed saw increased demand for its digital health solutions globally with the robust adoption of remote patient engagement and population health management. A major development in ResMed’s digital health line is the expansion of the reach of its Propeller Health technology through the partnership with Novartis.
Increased Focus on International Markets: ResMed continues to invest and expand its presence in high-growth markets like China, South Korea, India, Brazil and many countries in Eastern Europe. Interestingly, in each of these regions, ResMed is implementing long-term strategies to improve quality of patient life for the purpose of delivering better patient outcomes and reduce overall system healthcare costs within each individual country.
In the fiscal third quarter of 2021, revenues from the United States, Canada and Latin America improved 2.4% from the prior-year period for the Total Sleep and Respiratory Care business.
Image Source: Zacks Investment Research
Strong Sales of Mask Product Portfolio: ResMed’s strong sales across its mask product portfolio across major geographies over the past few months are encouraging. ResMed, during its fiscal third-quarter earnings call in April, confirmed witnessing resilience and growth in its mask and accessories sales during the quarter. Further, the company confirmed recording continued strong ongoing mask and accessory resupply in the United States.
Downsides
Dull Device Sales: ResMed, during its fiscal third quarter, recorded lower device sales, including decreased demand for ventilators due to the pandemic. Geographically, the United States, Canada and Latin America region’s device sales fell 1.8%. In the Combined Europe, Asia and other markets, the fall in device sales was 18% at CER. Globally, device sales declined 10% at CER.
Challenging Macroeconomic Scenario: Pricing pressure in the United States and Europe has been a staggering issue over the past few quarters. Healthcare reform in the United States has created a degree of uncertainty for the medical device companies and has created a less flexible pricing environment. Currency headwinds continue to affect ResMed's overseas sales.
Zacks Rank and Key Picks
Currently, ResMed carries a Zacks Rank #3 (Hold).
A few better-ranked stocks from the broader medical space are National Vision Holdings, Inc. (EYE - Free Report) , Envista Holdings Corporation (NVST - Free Report) and Phibro Animal Health Corporation (PAHC - Free Report) . While National Vision sports a Zacks Rank #1 (Strong Buy), Envista Holdings and Phibro Animal Health carry a Zacks Rank #2 (Buy). You can see the complete list of Zacks #1 Rank stocks here.
National Vision has an expected long-term earnings growth rate of 23%.
Envista Holdings has an expected long-term earnings growth rate of 26%.
Phibro Animal Health has a projected long-term earnings growth rate of 11%.
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Image: Bigstock
ResMed (RMD) Hits a New 52-Week High: What's Driving It?
ResMed Inc. (RMD - Free Report) scaled a new 52-week high of $242.50 on Jun 18, before closing the session marginally lower at $237.44.
The company’s shares have appreciated 32.5% over the past year, ahead of 14.9% growth of the industry it belongs to and 35.7% rise of the S&P 500 composite.
The company is witnessing an upward trend in its stock price, prompted by rising adoption of digital health solutions. Increased focus on international markets and strong demand for masks and other accessories. However, lower ventilator demand and a challenging macroeconomic scenario are concerning.
Lets’ delve deeper.
Factors at Play
Potential in Digital Health: Of late, ResMed has been focusing on digital health technology. The Brightree and MatrixCare software systems are significantly contributing to the company's capabilities of managing 90 million more people outside the hospital setting. During the fiscal third quarter, ResMed saw increased demand for its digital health solutions globally with the robust adoption of remote patient engagement and population health management. A major development in ResMed’s digital health line is the expansion of the reach of its Propeller Health technology through the partnership with Novartis.
Increased Focus on International Markets: ResMed continues to invest and expand its presence in high-growth markets like China, South Korea, India, Brazil and many countries in Eastern Europe. Interestingly, in each of these regions, ResMed is implementing long-term strategies to improve quality of patient life for the purpose of delivering better patient outcomes and reduce overall system healthcare costs within each individual country.
In the fiscal third quarter of 2021, revenues from the United States, Canada and Latin America improved 2.4% from the prior-year period for the Total Sleep and Respiratory Care business.
Strong Sales of Mask Product Portfolio: ResMed’s strong sales across its mask product portfolio across major geographies over the past few months are encouraging. ResMed, during its fiscal third-quarter earnings call in April, confirmed witnessing resilience and growth in its mask and accessories sales during the quarter. Further, the company confirmed recording continued strong ongoing mask and accessory resupply in the United States.
Downsides
Dull Device Sales: ResMed, during its fiscal third quarter, recorded lower device sales, including decreased demand for ventilators due to the pandemic. Geographically, the United States, Canada and Latin America region’s device sales fell 1.8%. In the Combined Europe, Asia and other markets, the fall in device sales was 18% at CER. Globally, device sales declined 10% at CER.
Challenging Macroeconomic Scenario: Pricing pressure in the United States and Europe has been a staggering issue over the past few quarters. Healthcare reform in the United States has created a degree of uncertainty for the medical device companies and has created a less flexible pricing environment. Currency headwinds continue to affect ResMed's overseas sales.
Zacks Rank and Key Picks
Currently, ResMed carries a Zacks Rank #3 (Hold).
A few better-ranked stocks from the broader medical space are National Vision Holdings, Inc. (EYE - Free Report) , Envista Holdings Corporation (NVST - Free Report) and Phibro Animal Health Corporation (PAHC - Free Report) . While National Vision sports a Zacks Rank #1 (Strong Buy), Envista Holdings and Phibro Animal Health carry a Zacks Rank #2 (Buy). You can see the complete list of Zacks #1 Rank stocks here.
National Vision has an expected long-term earnings growth rate of 23%.
Envista Holdings has an expected long-term earnings growth rate of 26%.
Phibro Animal Health has a projected long-term earnings growth rate of 11%.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How to Profit from Trillions on Spending for Infrastructure >>