ResMed Inc. (RMD) - Breathe easy

ResMed Inc. develops, manufactures, distributes, and markets medical device and cloud-based software applications targeting the management of sleep apnoea. The company operates in two segments, Sleep and Respiratory Care, and Software as a Service.

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The company delivered a strong September quarter result, with 11% revenue growth translating to 35% earnings per share growth. Revenues were 3% ahead of consensus due to higher rates of flow generator growth.

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The gross margin of 59.2% aligned with expectations, while operating expenses were slightly ahead of forecasts.

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Net operating cash flow increased by 14% compared to the previous corresponding period, despite higher inventory due to rebalancing sea versus air freight. Net debt fell, while the value of share buyback program was boosted.

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ResMed upped it FY25 EPS guidance thanks to jump higher flow generator revenues. Revenue growth for the current quarter is forecast at 10%. We forecast the company will be able to generate annualised EPS growth of 13% for the next few years, which justifies its current trading multiples. We ticked our price target up from $39.25 to $40.05 following the quarterly.

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