ResMed Stock Climbs 25.6% in a Year: What's Driving the Rally?

ResMed RMD has achieved impressive growth over the past year, with its shares rallying 25.6%. It has outperformed the industry’s 13.1% rise and the S&P 500 composite’s 15.7% gain.Presently carrying a Zacks Rank #2 (Buy), the renowned medical equipment company continues to gain from its widely adopted mask portfolio and strong device business. Expanding the Respiratory Care business with cutting-edge technologies and the momentum in the SaaS (Software as a Service) business are also highly encouraging.San Diego, CA-based ResMed holds a major position as a designer, manufacturer and distributor in the worldwide market for generators, masks and related accessories for the treatment of sleep-disordered breathing (SDB) and other respiratory disorders. The company’s software solutions are geared toward the fragmented and underserved OOH (out-of-hospital) care market, where it sees significant opportunities for innovation. Acquisitions are also a key part of ResMed’s ongoing success.Image Source: Zacks Investment ResearchFactors Favoring RMD’s GrowthThe rally in the share price can be linked to the strong demand for the company’s market-leading mask portfolio, benefiting from a competitor’s recall as well as ongoing product development. ResMed has successfully introduced a full suite of masks in its AirFit, AirTouch and other ranges while offering advanced and expanded integrations of its therapy-based software solutions, such as AirView, to promote greater patient adherence. AirFit F40 is performing extremely well in the U.S. market. In the second quarter of fiscal 2025, the company launched its breakthrough CPAP (continuous positive airway pressure) mask innovation, AirTouch N30i, in select markets.Masks and other businesses revenues increased 11% year over year globally, including 12% growth in the United States, Canada and Latin America. The ongoing rollout of ResMed’s Brightree ReSupply and Snap technologyhas supported ResMed’s U.S. market growth, with Snap set to become compatible with all HME (Home Medical Equipment) management platforms in 2025. Meanwhile, Device sales remain robust, driven by the combined availability of both AirSense 10 and AirSense 11 sleep devices. ResMed is gearing up to roll out AirSense 11 in more countries throughout 2025 after launching it in India this January.In Respiratory Care, the company is investing in newer-to-market technologies such as home-based, high-flow therapy (HFT) for treating chronic obstructive pulmonary disease (COPD). By actively generating clinical evidence and economic outcomes, ResMed aims to support the broader adoption of these technology innovations for treating lung disease at home. Furthermore, ResMed is advancing multiple digital health technology initiatives, investing in AI-driven capabilities and customer-facing AI products within its ecosystem.Investors are also upbeat about the company’s tendency for strategic buyouts to boost its SaaS revenues, with MEDIFOX DAN driving 8% year-over-year growth in the fiscal second quarter. ResMed expects to have sustainable organic growth across its portfolio of SaaS solutions in HME, home health, home nursing and beyond.Concerns for RMDThe company’s businesses can be affected by the ongoing macroeconomic volatilities, including headwinds arising from the Middle East conflict and adverse currency fluctuations. Also, sustained inflationary pressures could lead to higher operating expenses, weighing on ResMed’s profitability.A Glance at RMD’s EstimatesThe Zacks Consensus Estimate for ResMed’s fiscal 2025 and 2026 earnings per share (EPS) is expected to increase 22.7% and 9.4%, respectively, to $9.47 and $10.36. In the past 30 days, the Zacks Consensus Estimate for the company's fiscal 2025 EPS has increased by 4 cents.Revenues for fiscal 2025 are projected to grow 9% to $5.11 billion, followed by a 7.3% increase to $5.48 billion in fiscal 2026.Other Key PicksSome other top-ranked stocks in the broader medical space are Masimo MASI, Boston Scientific BSX and Cardinal Health CAH.Masimo has an earnings yield of 2.5%, well ahead of the industry’s -3.6% yield. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 14.4%. Its shares have surged 48.8% against the industry’s 1.3% decline in the past year.MASI sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Boston Scientific, carrying a Zacks Rank #2, has an earnings yield of 2.7% compared with the industry’s 1.4%. Shares of the company have rallied 53.9% compared with the industry’s 11.8% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 8.3%.Cardinal Health, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 10.7% compared with the industry’s 9.4%. Shares of the company have rallied 14.9% against the industry’s 2.4% fall. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 9.6%.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Boston Scientific Corporation (BSX): Free Stock Analysis Report Cardinal Health, Inc. (CAH): Free Stock Analysis Report ResMed Inc. (RMD): Free Stock Analysis Report Masimo Corporation (MASI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks