Stock of the day: ResMed
Despite the challenges posed by GLP-1 weight loss drugs, ResMed's Q2 report shows a robust 9% increase in revenue and strong earnings per share, signaling a promising future and making it a compelling buy for investors.
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This video was created on 2 August for IG audiences by ausbiz.
Stock of the day: ResMed (ASX:RMD)
Impressive revenue growth and earnings defy market challenges
In the second quarter, ResMed demonstrated remarkable financial resilience, posting a 9% increase in revenue, reaching US$1.22 billion, and earnings of US$1.98 per share. This performance is particularly noteworthy given the potential disruptions from the emerging market of GLP-1 weight loss drugs, which instead have been turned into opportunities, enhancing both prescription volumes and patient retention in associated therapies.
During a recent press conference, Reserve Bank Australia Governor Mick Farrell addressed the so-called "elephant in the room"—the impact of GLP-1 drugs. He highlighted an ongoing study tracking over 800,000 patients prescribed GLP-1 drugs who subsequently began positive airway pressure therapy. Results show increased patient engagement over time, suggesting a synergistic effect rather than a detrimental one.
What the future holds
As ResMed enters a new financial year, the outlook is positive. With a forward earnings trading multiple around 25-26 times, the valuation remains attractive given the company's history and operational stability. While potential volatility from external market factors like Eli Lilly's upcoming results could affect the stock, the long-term prospects for ResMed are encouraging.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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