ResMed Inc. (ASX: RMD) shares have been on fire over the past 12 months.
During this time, the sleep disorder treatment company's shares have rallied 44% higher.
But if you thought the gains were over, think again.
That's because Goldman Sachs is tipping the company's shares to rocket to a record high over the next 12 months.
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What is the broker saying?
According to a note out of the investment bank this morning, the broker believes that ResMed is destined to continue its strong growth long into the future and outperform consensus estimates. Even in the face of competition from GLP-1 (weight loss) drugs.
Commenting on ResMed's outlook, Goldman said:
Following stellar US devices growth (~20% FY21-FY24 CAGR), key investments as part of the company's 2030 strategy are set to accelerate growth across the rest of its portfolio. The R&D product launch cadence has stepped up with innovative mask and accessories launches over 2HCY24. Our revenue growth estimates for masks are 2.4%/6.6%/10.7% ahead of FY25/26/27 Visible Alpha Consensus Data, and we forecast RMD to meet the top end of is FY30 revenue financial target (Gse: +8.9% FY25-FY30 CAGR).
We believe GLP-1 drugs to treat OSA will co-exist with CPAP therapy based on the published clinical data and payor policies to date. Engagement on RMD's patient app (myAir) indicates ongoing momentum in therapy compliance, noting the potential of the rate of OSA diagnosis to step up from Zepbound's (GLP-1 drug from LLY) Medicare's coverage.
Why ResMed shares could be heading to a record high
The note reveals that Goldman has initiated coverage with a buy rating and $48.90 price target on ResMed's shares.
Based on its current share price of $37.54, this implies potential upside of 30% for investors over the next 12 months.
Explaining its buy thesis, Goldman Sachs said the following:
RMD is the world's leading CPAP manufacturer of devices and masks in the treatment of OSA. The company has expanded to providing software services to out of hospital healthcare providers including Durable Equipment Manufacturers (DMEs), nursing homes and home health and hospice agencies.
Our Buy recommendation on RMD is premised on (1) Ongoing robust new patient growth for CPAP therapy despite the market entry of GLP-1 drugs to treat OSA, (2) Further RMD market share gains, building on its #1 global market position, (3) Expansion of the OSA market in regions outside of the US. We believe the stock's current trading multiple is unjustified based on its growth outlook.
