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

sdf

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

Broker Notes

Broker warns regulated electricity could threaten AGL shares 

What could the government review mean for utility stocks?

Read more »

Two brokers analysing stocks.
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 »

A young well-dressed couple at a luxury resort celebrate successful life choices.
Broker Notes

These ASX 200 shares could rise 40% to 50%

Analysts at Macquarie see potential for these shares to deliver the goods for investors.

Read more »

Six smiling office colleagues stand in a row and look at the camera.
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 »

woman holding 'hiring' sign in shop
Broker Notes

How much upside does Macquarie tip for Seek shares?

The broker recently reviewed Australian job ad volumes for May.

Read more »

Ecstatic woman looking at her phone outside with her fist pumped.
Broker Notes

Macquarie tips 50% return for this cheap ASX All Ords stock

Let's see which stock the broker is feeling bullish about this week.

Read more »

A woman sits at her home computer with baby on her lap, and the winning ticket in her hand.
Consumer Staples & Discretionary Shares

How much upside does Macquarie expect for Lottery Corporation shares?

This ASX 200 stock has proven resilient through various economic conditions.

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Broker Notes

Guess which ASX 300 stock was downgraded to sell today

Bell Potter has become bearish on this stock. But why?

Read more »