The ResMed Inc (ASX: RMD) share price was a relatively positive performer on Tuesday.
The sleep treatment focused medical device company's shares ended the day 0.2% higher at $29.75.
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Can the ResMed share price keep rising?
The good news for investors is that this small gain may only be the start for the ResMed share price.
According to a recent note out of Citi, its analysts have a buy rating and $35.50 price target on the company's shares.
Based on the current ResMed share price, this implies potential upside of 19% for investors over the next 12 months.
What did the broker say?
While Citi has reduced its revenue and earnings estimates to reflect the supply chain issues the company is facing, the broker remains very positive its outlook. This is due to its belief that ResMed will win a permanent additional 10% market share from a major product recall from rival Philips.
In light of this and its current valuation, the broker sees a lot of value in the ResMed share price at the current level.
Its analysts explained:
RMD is trading at PE of ~28x FY24E, below historical avg of ~32x. Maintain Buy. RMD cut its additional device guidance in FY22 by $100m to $200-250m due to the difficulty in sourcing semiconductors as it attempts to fill the void left by the Philips recall (whose device sales were ~US$800m pa).
We forecast $225m in extra sales (from US$360m) in FY22 – we expect this to continue in FY23 where we assume ~US$350m (from US$315m) of extra sales. Despite the short-term impact, we continue to expect ResMed will make a permanent 10% market share gain in devices due to the Philips' recall.
