RMD - ResMed downgraded at JPMorgan and RBC despite earnings beat

Despite posting better than expected financials for Q4 fiscal 2022 ResMed ( NYSE: RMD ) traded lower on Friday after JPMorgan and RBC Capital Markets moved to downgrade the dual-listed respiratory device maker.

JPMorgan analysts David Low and Silvia Luo argue that ResMed’s ( RMD ) “current elevated valuation leaves little room for error,” despite its potential to take market share in future quarters as production ramps up and a leading rival remains off the market.

In addition, they point out that the company’s decision to acquire German software solutions provider MediFox has pushed back a potential buyback of stock.

Despite their downgrade to Neutral from Overweight, the analysts wrote: “We were encouraged by management’s confidence that these gains will be held even after the competitor returns.”

The price target pushed out to Jun. 2023 from Mar. 2023 stands at $250, implying only ~4% upside to the last close.

Meanwhile, RBC Capital Markets downgrades ResMed ( RMD ) to Sector Perform from Outperform, citing valuation.

The analyst Craig Wong-Pan argues that the company is poised to record sequential revenue growth for every quarter in FY2023, supported by price increases introduced in July 2023.

While increasing the forecasts, the firm downgrades the company citing the sharp rally in its share price and minimal return indicated in the new price target of $252, which has been revised down from $246 per share.

The downgrades come at a time when ResMed’s ( RMD ) Dutch rival Philips ( PHG ) continues to face issues related to last year’s ventilator recall.

For further details see: