On May 15, we issued an updated research report on ResMed Inc. (RMD - Free Report) . The stock carries a Zacks Rank #3 (Hold), at present.
Over the past six months, shares of ResMed have outperformed its industry. The stock has gained 11.7% against 7.9% decline of the industry.
ResMed exited third-quarter fiscal 2020 with better-than-expected results. The company registered growth at CER across its key operating segments — Total Sleep and Respiratory Care, and SaaS. Increase in demand for the company’s life support ventilators, non-invasive ventilators and ventilation mask systems amid the pandemic boosted ResMed’s sales during the third quarter.
In this regard, ResMed produced more than 52,000 non-invasive ventilators, including bilevels and invasive ventilators, during the quarter. This marked a three-fold increase in production from the year-ago level.
The company recently launched cloud-based remote monitoring software for ventilators and Lumis bilevel devices across Europe via its AirView platform. This was launched keeping in mind the requirement of ventilators by patients on a daily basis for assisted breathing even during the ongoing pandemic. Further, many patients require regular medical check-ups and support.
Geographically, ResMed’s performance was impressive. Further, a strong solvency level and expansion of both margins buoy optimism. Its huge potential in digital health and increasing opportunities in new markets boost investor confidence.
On the flip side, global supply chain disruption, manufacturing halt due to lock down and lesser patient visits at clinics as a result of the pandemic are hampering global sales. Also, challenges like competitive bidding and reimbursement issues are concerns. The company is also constantly exposed to unfavorable foreign-exchange fluctuations. Additionally, rising operating expense is another major headwind.
Some better-ranked stocks from the broader medical space include Aphria Inc. (APHA - Free Report) , HMS Holdings Corp. (HMSY - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Aphria has an estimated long-term earnings growth rate of 24.6%.
HMS Holdings has an estimated long-term earnings growth rate of 11%.
West Pharmaceutical has a projected long-term earnings growth rate of 9.2%.
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