ResMed Inc. (ASX: RMD) shares have been on form over the past 12 months.
During this time, the sleep disorder treatment company's shares have rallied almost 40% higher.
The good news for investors is that it may not be too late to buy this high-quality ASX 200 stock according to analysts at Goldman Sachs.
In fact, not only does the broker think that outsized returns are on the cards over the next 12 months, but it feels that ResMed could be one of the best shares to buy in the whole Asia-Pacific region.
Why is ResMed one of the best ASX 200 stocks to buy?
According to a note out of Goldman Sachs, its analysts have just added ResMed to the broker's coveted Asia-Pacific conviction buy list.
These are the shares that the broker rates as the crème de la crème. In total, there are just 27 companies included on the list from the entire Asia-Pacific region and only three shares that are trading on the ASX 200 index.
Commenting on its addition to the list, Goldman Sachs said:
Resmed is the world's leading CPAP manufacturer of devices and masks for the treatment of Obstructive Sleep Apnea (OSA). Davin Thillainathan's Buy investment thesis is premised on: (1) Robust Continuous Airway Pressure Therapy (CPAP) patient growth assisted by growing awareness on OSA, (2) Further RMD market share gains, building on its #1 global market position, (3) Operating margin expansion. He forecasts ~10/15% CAGR for FY24-FY27E group revenue and non-GAAP net income respectively.
Core earnings drivers include: Solid US masks growth (+13% FY24-FY27 CAGR), step up in ex-US market revenue (+11% FY24-FY27 CAGR), and operating margin expansion driven by favorable product mix shift and SG&A leverage.
Big return potential
According to the note, the broker has put a conviction buy rating and $49.00 price target on ResMed's shares.
Based on its current share price of $37.12, this implies potential upside of 32% for investors between now and this time next year.
Goldman highlights that the ASX 200 stock could be poised to re-rate to higher multiples thanks to its double-digit earnings growth. It adds:
Davin sees compelling valuation upside with RMD's multiple (relative to the ASX200) below its 10-year average, with double-digit earnings delivery over the next 12 months as a key catalyst for a re-rate.
All in all, this could make ResMed a top option for investors looking for high-quality shares to buy now.
