On June 11, 2014, we issued an updated research report on
). ResMed delivered a weak third-quarter fiscal 2014 with in-line
earnings and revenues that lagged the Zacks Consensus Estimate.
However, the still-untapped obstructive sleep apnea (OSA) market
should catalyze growth in the near term.
In the quarter under review, ResMed reported adjusted earnings
of 63 cents per share, which although up 8.6% year over year, were
merely in line with the Zacks Consensus Estimate. Revenues of
$397.8 million increased 3.7% but fell below the Zacks Consensus
Estimate of $399 million.
Given the difficult year-over-year comparable and challenging
market conditions in the U.S., revenues in the Americas grossed
$216.1 million, flat with the year-ago quarter number. Moreover,
the ongoing headwind related to reimbursement issues across the
world along with the recent healthcare reform in the U.S. continues
to take a toll on the company's business.
Nevertheless, ResMed continues to gain from a solid foothold in
the huge sleep-disordered breathing (SDB) market. According to the
company, several initiatives are now being taken to increase
awareness regarding OSA. This has led to improved understanding of
the role of SDB treatment in the management of cardiac, neurologic,
metabolic and related disorders, and has driven an increase in
home-based diagnosis. This, in turn, promises a growing SDB market
for the company in the near future.
Continuous solid overseas growth amid several macroeconomic
uncertainties is also encouraging. Robust pipeline development also
bolsters confidence. Meanwhile, ResMed has been rewarding its
shareholders with attractive share repurchases and dividends thus
upholding investor faith.
The stock currently carries a Zacks Rank #3 (Hold).
Key Picks from the Sector
Better-ranked stocks that warrant a look in the broader medical
). All these stocks carry a Zacks Rank #2 (Buy).
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