ResMed (ASX: RMD) shares are outperforming the market on Tuesday.
In afternoon trade, the sleep disorder treatment company's shares are up 2% to $35.73.
This compares favourably to a 0.4% decline by the S&P/ASX 200 Index (ASX: XJO).
Why are ResMed shares outperforming?
Investors have been bidding the company's shares higher today following a strong night of trade for its NYSE-listed shares on Monday.
That gain was driven by the release of ResMed's 2030 strategy to drive growth, profitability, and shareholder returns.
There are three key components to its 2023 strategy. The first is to "grow and differentiate ResMed's unmatched core sleep apnea franchise, led by demand generation and demand capture."
Management also aims to "capitalize on ResMed's market opportunity and brand advantage in broader sleep health and breathing health adjacencies."
And finally, research and development (R&D) will continue to be a major focus for the company. It advised that it plans to "invest 7% of revenue into R&D to invent, create, and differentiate a fully integrated digital ecosystem for health technology delivered at home."
In addition to its strategy, ResMed announced its five-year revenue and earnings growth outlook, which reflects its plans to accelerate product and technology innovation, operational excellence, commercial execution, and financial strength.
What was announced?
ResMed revealed that its new strategy is expected to see it help more than 500 million people worldwide achieve their full health potential in 2030.
The company's chair and CEO, Mick Farrell, said:
Today, more than 2.3 billion people suffer from major sleep health and breathing issues, the vast majority of which are undiagnosed. By building on our leadership in connected digital health, our 2030 Strategy will further enable us to transform sleep health, breathing health, and health tech at home through world-class products and digital solutions.
We remain focused on delivering a more integrated and intelligent ResMed ecosystem, transforming the consumer and provider experience to offer better care, simplify the health journey, and improve access to our therapies. As we grow our core sleep apnea market, we will also leverage our strong financial position and expertise in broader sleep health to expand into adjacent markets and accelerate the release of new products at an unprecedented velocity.
Revenue and earnings outlook
Giving ResMed's shares a boost today is its new five-year financial outlook.
The company will be targeting high-single-digit revenue growth and earnings growth that is higher than its revenue growth.
Commenting on its outlook, ResMed CFO, Brett Sandercock, said:
Since our last Investor Day in 2021, we have delivered on our commitments, and this new outlook reinforces that ResMed is well positioned to maintain its track record of strong financial performance. Our financial strength and low capital requirements create robust cash generation, and our capital allocation strategy will continue to prioritize innovation – through reinvestment in our core business, a disciplined and strategic approach to M&A, and a balanced capital return policy. We are confident this approach will deliver significant value to shareholders as we execute our 2030 Strategy.
ResMed shares are now up 55% over the past 12 months.
