ResMed (RMD) Stock Forecast & Price Target

ResMed's financial performance demonstrates a positive outlook, highlighted by a significant gross margin of 62.3%, which exceeded consensus estimates by 40 basis points, and an operating margin of 36.3%, surpassing expectations by 70 basis points. The masks segment achieved a notable year-over-year growth of 16% in constant currency, reflecting robust demand amid increasing sleep apnea diagnoses, while the midpoint of FY26 gross margin guidance was adjusted upward by 50 basis points to 62.5%. Additionally, earnings per share for the quarter reached $2.81, outperforming projections, partly due to favorable foreign exchange impacts, which underscores the company's strong operational efficiency and market presence.

Management has revised its fiscal year 2026 growth outlook for the respiratory segment down to mid-single digits from upper mid-single digits, indicating a slowdown in expected growth. Operational expenditures are anticipated to remain high despite projected revenue growth exceeding high single digits, which may hinder profitability leverage. Additionally, concerns regarding competitive pressures, particularly from Philips' return to the U.S. market and the potential impact of GLP-1 drugs on obstructive sleep apnea (OSA) device volumes, further contribute to a negative outlook on ResMed's stock.