- ResMed has had a strong last 2 quarters, on the back of demand in ventilator sales and their respirator segment.
- The company has shown high operating leverage on the back of lower SG&A costs, in spite of higher production of ventilators and freight costs.
- Management have hinted that operating margins will remain flat into the upcoming quarter, and that a recovery in other segments is imminent, especially in sleep.
- There are valuation risks on shares, which show a wide range in value based on methodology, and correlation in valuation metrics to price outcomes has historically been low.
- We are neutral on the company in light of these risks, alongside headwinds in the sleep segment and from COVID-19 uncertainty.
For further details see:
ResMed's Double-Digit Operating Leverage Is Offset By Valuation Risk