Key Takeaways:
- ResMed (RMD) stock has fallen around 22% year to date and around 30% below its 52-week high of $294, but the company continues to deliver consistent earnings beats and double-digit revenue growth.
- Q3 fiscal 2026 adjusted EPS of $2.86 beat the consensus estimate of $2.80, and revenue climbed 11% year over year to $1.4 billion, driven by strong demand for its sleep therapy devices and software solutions.
- RMD stock could rise from $208 to around $257 per share by June 2028, based on around 8% annual revenue growth, 36.7% operating margins, and a 17.4x P/E multiple.
- That implies a 23.6% total return and an annualized return of around 10% over the next 2.1 years, plus a 1.3% dividend yield.
What Happened?
ResMed (RMD) reported a solid Q3 fiscal 2026 earnings result in late April 2026. The company delivered adjusted earnings per share (EPS) of $2.86, beating analyst estimates of $2.80 by around 2%.
Revenue grew 11% year over year to $1.4 billion, reflecting strong device demand and continued growth in its software-as-a-service (SaaS) business that serves out-of-hospital healthcare providers. ResMed also declared a quarterly dividend of $0.60 per share.
The company also made an important leadership transition. Chief Financial Officer Brett Sandercock announced his retirement, and the company named Aaron Bloomer as his successor. ResMed also launched its AirTouch F30i Comfort Full Face CPAP mask in the United States in February 2026.
A CPAP mask is a device used to treat obstructive sleep apnea, the condition that drives the vast majority of ResMed’s device revenue. So both business results and product innovation continued at pace.
Infrastructure investments also reflect confident long-term planning. ResMed announced a new distribution center in Greenwood, Indiana, scheduled to open in 2027. This signals confidence in continued volume growth across the United States and adds fulfillment capacity to support rising demand. Investors see these kinds of capital investments as a sign of management’s conviction in the business outlook.
So why has the stock fallen so much despite strong fundamentals? Investors appear concerned about potential disruptions from weight-loss drugs (GLP-1 medications) that could reduce sleep apnea rates long-term. But the near-term revenue trajectory remains strong, and management has maintained consistent execution through the uncertainty.
Here’s why ResMed stock could deliver solid returns through 2028 as its platform proves durable across multiple healthcare delivery settings.
What the Model Says for RMD Stock
We analyzed the upside potential for ResMed stock using valuation assumptions based on its growing installed base of sleep therapy devices, expanding digital health software platform serving out-of-hospital care providers, and consistent margin profile.
Based on estimates of around 8% annual revenue growth, 36.7% operating margins, and a normalized P/E multiple of 17.4x, the model projects ResMed stock could rise from $208 to around $257 per share.
That would be a 23.6% total return, or an annualized return of around 10% over the next 2.1 years.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for RMD stock:
1. Revenue Growth: 8%
ResMed delivered Q3 fiscal 2026 revenue of $1.4 billion, growing around 11% year over year. The company operates through two primary segments: devices, which include CPAP machines and masks for sleep apnea treatment, and software, which serves home health agencies and other out-of-hospital care providers. Both segments are growing, so the revenue base is broad and well diversified.
Based on analysts’ consensus estimates, we used around 8% annual revenue growth. This reflects a slight moderation from recent double-digit growth rates as the company laps strong prior-year comparisons. But the global sleep apnea diagnosis rate continues to grow, and ResMed’s installed device base creates a recurring upgrade and consumables revenue stream.
The company is also investing in AI-powered digital health tools to deepen its software platform. So longer-term revenue optionality extends beyond device sales into software subscription income, which typically carries higher margins and better visibility than device replacement cycles.
2. Operating Margins: 36.7%
ResMed carries a strong gross margin of around 62.2% LTM, reflecting the value of its proprietary technology and deep customer relationships in respiratory care. The company’s EBIT margin has also remained strong at around 34.8% LTM, demonstrating disciplined cost management alongside revenue growth.
Based on analysts’ consensus estimates, we used 36.7% operating margins. This reflects a gradual improvement from current reported levels as the software business grows faster than the device segment. Software revenue carries higher margins, so a favorable mix shift supports the assumption over the forecast period.
The new Indiana distribution center, opening in 2027, should also improve fulfillment efficiency and reduce delivery costs over time. So operating leverage from both mix improvement and infrastructure upgrades supports the 36.7% margin assumption through June 2028.
3. Exit P/E Multiple: 17.4x
ResMed currently trades at a forward P/E of around 17.4x, which is below its five-year historical average. The discount reflects investor uncertainty about GLP-1 weight loss drugs and their potential long-term impact on sleep apnea prevalence. But near-term device demand shows no sign of slowing, and the company continues to beat consensus estimates consistently.
Based on analysts’ consensus estimates, we maintained a 17.4x exit P/E. This is a conservative multiple for a healthcare technology company with double-digit revenue growth and margins above 35%. If the GLP-1 concern recedes as evidence accumulates that device demand remains robust, the multiple could expand well above this assumption.
The stock also pays a quarterly dividend of $0.60 per share, adding a 1.3% yield at current prices. So the combination of moderate price appreciation and dividend income supports the around 10% annualized total return estimate in our base case.
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What Happens If Things Go Better or Worse?
Different scenarios for RMD stock through 2030 show varied outcomes based on sleep apnea diagnosis growth, GLP-1 drug impact, and digital health software adoption (these are estimates, not guaranteed returns):
- Low Case: GLP-1 drugs meaningfully reduce sleep apnea rates, and revenue growth slows toward 6% → around 5% annual returns
- Mid Case: Device demand stays healthy, and the software platform continues growing → around 8% annual returns
- High Case: Software momentum accelerates and multiple re-rates toward historical averages → around 11% annual returns
Going forward, ResMed’s stock direction will be shaped by two competing forces: strong near-term business execution and long-term uncertainty about GLP-1 drug adoption among sleep apnea patients. The company has so far shown that demand remains resilient, and three consecutive quarterly earnings beats support management’s credibility.
Investors who believe the device business will prove durable and the software platform will scale may find the current valuation a compelling entry point into a high-quality healthcare platform.
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Should You Invest in ResMed?
The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.
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.
You can build a free watchlist to track RMD alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.
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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!
