Key Stats for RMD Stock
- Past week performance: +4.0%
- 52-week range: $180 to $294
- Valuation model target price: $292
- Implied upside: 28% over 2.9 years
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A Record Quarter, Undercut by a Cautious Outlook
ResMed (RMD) shares climbed about 4.0% this week, and that move clawed back most of the sharp drop that followed its August 7 earnings report. The stock has now fully recovered above where it traded before that selloff, even though the guidance that triggered the drop hasn’t changed.
Q4 fiscal 2026 revenue rose 9% year over year to a record $1.46 billion, and non-GAAP EPS jumped 16% to $2.95, beating the $2.89 consensus. Full fiscal year revenue grew 10% to $5.7 billion, while EPS climbed 17%. Those are strong numbers by almost any measure.
But management’s fiscal 2027 guidance called for just 5% to 7% core revenue growth, a step down from the 8% pace in fiscal 2026. Three factors explain that slowdown: the pending $490 million sale of the MatrixCare software business, a temporary suspension of Astral ventilator sales tied to a safety notice, and dilution from the recently closed Noctrix acquisition.
CEO Mick Farrell struck a confident tone anyway. He said the company “closed fiscal year 2026 with strong fourth quarter results, reflecting continued momentum of our global business, sustained demand for our market leading products, and disciplined execution of our strategy.” He also pushed back on fears that GLP-1 drugs might hurt demand, since he said core markets “remain largely under-penetrated.”
If ResMed’s core sleep business keeps growing at its underlying pace once these headwinds fade, this week’s recovery may prove more accurate than the initial post earnings drop. The next real test comes with Q1 fiscal 2027 results in late October.
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A Portfolio in Transition
Under valuation model assumptions realized through 6/30/29, the stock is modeled using:
- Revenue Growth (CAGR): 5.4%
- Operating Margins: 36.7%
- Exit P/E Multiple: 18.9x
Based on these inputs, the model estimates a $292 target price, implying 28% total upside from the current share price and a 9.0% annualized return.
ResMed’s valuation sits right at the edge of moderately attractive, and the gap between this year’s 5.4% modeled growth and the company’s stronger historical pace tells the real story. Once MatrixCare fully exits the portfolio and the Astral suspension lifts after fiscal 2027, growth should reaccelerate back toward ResMed’s typical high single digit range.
Margins remain ResMed’s clearest strength, though. Operating margin of 36.7% modeled here builds on 180 basis points of expansion delivered in fiscal 2026 alone, driven by supply chain gains. The MatrixCare sale should help margins further, since that business carried lower profitability than ResMed’s core device and mask segments.
Product expansion offers another lever too. The Noctrix acquisition adds a restless legs syndrome device sold through the same physician channels ResMed already uses, so the company gains a new growth avenue without building fresh distribution from scratch.
Against its own trading history, ResMed’s current 18.9x forward multiple sits well below its five and ten year averages. That gap suggests the market already priced in real caution around the guidance reset, even after this week’s bounce.
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ResMed Versus the Sleep and Respiratory Field
Koninklijke Philips (PHG) remains ResMed’s most direct global competitor in sleep apnea devices, though Philips has struggled to rebuild market share since its own multiyear device recall. That gap left ResMed with an outsized share of new patient starts in many markets, and it has been a persistent tailwind for device revenue over the past several years.
Intuitive Surgical (ISRG) offers a useful profitability benchmark, given its similarly premium growth and margin profile. ISRG’s revenue growth has generally outpaced ResMed’s recently, but ResMed’s modeled operating margin of 36.7% still compares well against most medical device peers of similar size.
ResMed’s modeled revenue growth of 5.4% sits below its trailing five year average of 12.1%, and that gap is almost entirely explained by the MatrixCare divestiture and Astral suspension, rather than any weakness in core sleep apnea demand.
What’s Driving RMD Stock Going Forward?
The MatrixCare sale, expected to close around September 1, is the most immediate catalyst, since closing on schedule would remove uncertainty and let investors focus on the cleaner core sleep business.
GLP-1 drug adoption remains a closely watched wildcard too. Management has pointed to data suggesting weight loss medications steer more patients toward CPAP therapy rather than away from it, but this remains one of the more contested debates among healthcare investors.
The Astral ventilator suspension, which creates a $75 million revenue headwind through fiscal 2027, should resolve once the global safety action concludes, and that could remove a drag on both revenue and sentiment heading into fiscal 2028.
Capital returns are also worth tracking, since ResMed plans $1.5 billion in share repurchases for fiscal 2027, including a $450 million accelerated buyback funded by MatrixCare proceeds, alongside continued dividend growth.
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Should You Invest in ResMed?
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Pull up RMD, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
