Top broker says buy ResMed and this ASX 200 share

Ord Minnett was impressed with their quarterly updates from last month.

| More on:
Happy shareholders clap and smile as they listen to a company earnings report.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A number of companies have released their quarterly updates in recent weeks.

Analysts at Ord Minnett have been running the rule over these updates and have picked out two ASX 200 shares that impressed enough to be rated as buys.

Here's what the broker is saying about them:

ResMed Inc. (ASX: RMD)

The first ASX 200 share that impressed is ResMed. It is a developer, manufacturer, distributor, and marketer of medical device and cloud-based software applications targeting the management of sleep apnoea.

Ord Minnett described ResMed's result as "strong" and has bumped its earnings estimates higher to reflect this and its positive outlook. It said:

The company delivered a strong September quarter result, with 11% revenue growth translating to 35% earnings per share growth. Revenues were 3% ahead of consensus due to higher rates of flow generator growth. ‍ The gross margin of 59.2% aligned with expectations, while operating expenses were slightly ahead of forecasts. ‍ Net operating cash flow increased by 14% compared to the previous corresponding period, despite higher inventory due to rebalancing sea versus air freight. Net debt fell, while the value of share buyback program was boosted.

ResMed upped it FY25 EPS guidance thanks to jump higher flow generator revenues. Revenue growth for the current quarter is forecast at 10%. We forecast the company will be able to generate annualised EPS growth of 13% for the next few years, which justifies its current trading multiples. We ticked our price target up from $39.25 to $40.05 following the quarterly.

Whitehaven Coal Ltd (ASX: WHC)

As well as ResMed shares, Ord Minnett is tipping Whitehaven Coal as an ASX 200 share to buy following the recent flurry of quarterly updates.

It develops and operates metallurgical and thermal coal mines in New South Wales and Queensland. ‍

Much like ResMed, the broker highlights that Whitehaven Coal delivered a solid quarterly update last month. It said:

The company had a solid September quarter of production and sales, with all mines delivering as planned or better. Group performance in Q1FY25 included managed run-of-mine production of 9.7Mt, and total equity sales of 6.4Mt. Net debt was $1.2 billion. ‍ Queensland operations achieved strong production and productivity improvements at Blackwater and Daunia, with run-of-mine (ROM)production up 11% and sales up 13%. Average coal price increased to $259/t. ‍

New South Wales saw improved Narrabri production and focused on overburden removal. Run-of-mine production was down 12%, with equity sales down 16%. Average coal price was $211/t. ‍ Run-of-mine coal production is expected to increase in the second half of FY25. Global metallurgical coal production shortfalls and increased Indian demand are expected to drive prices higher, which will benefit Whitehaven. ‍

In light of this, it has put a buy rating and $9.00 price target on its shares.

Motley Fool contributor James Mickleboro has positions in ResMed. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Broker Notes

Woman in celebratory fist move looking at phone
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

Man jumps for joy in front of a background of a rising stocks graphic.
Broker Notes

These ASX 200 shares could rise 20% to 50%

Looking for big returns? Brokers think these shares could do the job.

Read more »

A young man sits at his desk working on his laptop with a big smile on his face.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

man thinking about whether to invest in bitcoin
Broker Notes

Why Macquarie expects this ASX 200 dividend stock to keep outperforming

Macquarie has tipped this ASX 200 dividend stock to outperform. Let’s find out why.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Broker Notes

These ASX 200 shares could rise 20% to 35%

These shares are being tipped to deliver market-beating returns by analysts.

Read more »

Keyboard button with the word sell on it.
Broker Notes

8 ASX All Ords stocks downgraded to sell ratings

Find out which shares are out of favour with the experts.

Read more »

Woman smiling whilst shopping in a clothing store.
Dividend Investing

Why this quality ASX 300 dividend stock is tipped to surge 54%

A leading fund manager forecasts significant outperformance from this quality ASX 300 dividend stock.

Read more »

A group of businesspeople clapping.
Broker Notes

Bell Potter names more of the best ASX 200 stocks to buy in June

These stocks could be best buys this month according to the broker.

Read more »