ResMed's Rally Tempers Bull's Enthusiasm — Market Talk

What happened

Morgans analyst Derek Jellinek lowered his recommendation on ResMed to "accumulate" from "buy" after the share price recovered, noting the stronger-than-expected September quarter contained multiple one-off gains. Morgans raised its target price 1.3% to A$40.00.

Confirmed

Global impact / market context

A lower rating even as the target price rises signals the analyst sees less room for gains after the rally. Investors holding ResMed may need to expect slower upside, because one-off gains in the September quarter may not repeat and could flatter future comparisons.

Analyst inference

The note frames ResMed's fundamentals as sound, citing U.S. device demand, mask innovation, productivity efforts and strong capital returns, which means cash returned to shareholders. Still, the tempered rating suggests the recent share recovery has already captured much of that good news, limiting near-term reward.

Analyst inference

What to watch

1. Morgans now rates ResMed "accumulate" rather than "buy," with a target price of A$40.00, 1.3% higher. Watch whether other analysts follow with similar rating changes. Confirmed
2. Watch whether ResMed's next results show whether the one-off gains in the September quarter repeat or fade, since that would clarify how durable the company's profit growth really is. Proposed
3. Watch U.S. device demand, mask innovation and productivity initiatives, which the analyst cites as core supports. If these weaken, the case for the higher target price could erode and pressure the stock. Analyst inference

Evidence

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