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.
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