Resmed – Q4 Earnings

ResMed is under Algo Engine buy conditions and is a current holding in our ASX top 100 model portfolio.

RMD announced 4Q20 earnings, which were better-than-expected, underpinned by robust COVID-19 ventilator demand. However, modest revenue growth is expected in the near-term, implying limited near-term growth.

The 40x PE multiple looks too rich for the current earnings outlook. The forward dividend yield is 1%.

We suggest waiting for the next Algo buy signal to re-enter RMD on a pullback. Our new entry target is $22.

ResMed – Opportunity Approaches

ResMed is a current holding in our ASX 100 model portfolio.

The company reports 1Q20 earnings on 25 October and we expect revenue growth to be 15%+ and EBIT to be up 10%+ on the same time last year.

We look for an entry-level into RMD on the current price weakness and will update our readers further, following the earnings result.



Resmed – Buy

ResMed is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.

RMD report earnings on the 24th Oct and the market is looking for 10%+ in EPS growth. We expect buying support to increase ahead of the result and see support building at $19.50.



Resmed – 2Q19 Earnings

We recommend adding Resmed to your watch list.

RMDis a global company involved in the development and manufacturing of medical products for the treatment of respiratory disorders.  Global mask sales increased 10%+ on the same time last year.

Low returns from new acquisitions, disappointed investors and the soft 2Q19 earnings update resulted in the stock falling by over 10%

It’s difficult to say with certainly where buyers will step back in, but we are confident of the long-term story with Resmed.

The chart below illustrates the lower band where we see deep value for investors willing to take a 1 – 3 year outlook.

Resmed Reports 1Q19 Growth Over 28%

RMD has rallied from $13.75 to $14.75 following last weeks reported strong 1Q19 result, which included EBIT +28% on the same time last year.

The company also delivered robust top-line growth, which came in ahead of market expectations. Gross margins held at 58+%.

We anticipate EPS growing from US$3.70 in FY19 to US$4.50 in FY21 and revenue growing from US$2.9 billion to US$3.5 billion over the same period.



Resmed – Valuation Review

Resmed  should continue to deliver 10% EPS growth per year over the next 2 – 3 years.

However, at 27x F19 earnings and 1.5% yield, the stock looks expensive.

Other names within the Healthcare space such as CSL at 32x and COH at 38x FY19 also, look expensive.

With the above in mind, our base case is that the sector trades sideways and investors should add a covered call option to enhance the returns.



Buy Healthcare Names: CSL, RMD & SHL

Our Algo Engine has triggered buy signals in Sonic Healthcare, Resmed and CSL over the past few trading sessions.

RMD has experienced its first sell-off since rallying from $10 last year to $16 only a few weeks ago.

The ALGO engine is now flagging the new “higher low” at $14 and we suggest buying a 1/2 size allocation here and then waiting to see if we get another ALGO signal to add to the position.

CSL provides good long-term fundamentals. The PE is still expensive, however, 10 – 20% EPS growth is attractive! Accumulate at $180

SHL looks to be good value at $23. We see resistance is $25, so look to sell call options to enhance the return. 

Chart: RMD

Chart: CSL

Chart: SHL