How can GLP-1 drug impact performance of ResMed (ASX: RMD)?

2 min read | January 18, 2024 07:41 PM AEDT | By Team Kalkine Media

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The ResMed Inc. (ASX: RMD) share price has navigated a challenging 12 months, experiencing fluctuations driven by market concerns regarding GLP-1 drugs like Ozempic. As the eagerly anticipated Q2 update approaches, investors are contemplating whether now is the opportune moment to acquire ResMed shares. In this analysis, we explore the recent performance, analyst perspectives, and potential value, providing insights for investors seeking clarity.

ResMed's Year in Review

ResMed shares exhibited resilience, rebounding from a 52-week low of AU$21.14 in September. However, the shares remain down by 20% on an annual basis.

GLP-1 Concerns

Market sentiment has been influenced by concerns over the impact of GLP-1 drugs on ResMed's addressable market.

Analyst Projections

Citi anticipates double-digit revenue growth in the second quarter, attributing it to robust performances in devices, masks, and software.

The broker affirms value in ResMed shares, assigning a buy rating and setting a $29.00 price target, suggesting an 11.5% upside over the next 12 months.

Goldman Sachs' Perspective

Goldman Sachs aligns with Citi's positive outlook, also recommending ResMed as a buy.

The broker is more bullish, with a buy rating and a $32.00 price target, indicating a potential 23% return for investors.

Overcoming GLP-1 Concerns

Analysts at Goldman Sachs dismiss concerns over GLP-1 drugs, stating that perceived downside risks have been overemphasized in ResMed's current valuation.

Despite a 3% reduction in the target price, the broker sees asymmetric upside risk from current levels and maintains a Buy rating.

Is ResMed a Good Value?

Analysts project growth potential, emphasizing the company's strengths in the devices, masks, and software segments.

Conclusion

As ResMed gears up for its Q2 update, investor attention intensifies. Citi and Goldman Sachs concur on the positive outlook, highlighting the potential for double-digit revenue growth and substantial upside. The evaluation of GLP-1 concerns presents an opportunity for investors to reconsider ResMed's value proposition. Whether it's Citi's 11.5% or Goldman Sachs' 23%, the potential returns suggest that ResMed's shares might be worth considering.

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