ResMed Inc. Just Recorded A 13% EPS Beat: Here's What Analysts Are Forecasting Next
Last week, you might have seen that ResMed Inc. (NYSE:RMD) released its first-quarter result to the market. The early response was not positive, with shares down 9.2% to US$230 in the past week. It looks like a credible result overall - although revenues of US$1.4b were in line with what the analysts predicted, ResMed surprised by delivering a statutory profit of US$2.92 per share, a notable 13% above expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following last week's earnings report, ResMed's 29 analysts are forecasting 2027 revenues to be US$5.83b, approximately in line with the last 12 months. Statutory earnings per share are predicted to increase 5.5% to US$11.95. Before this earnings report, the analysts had been forecasting revenues of US$5.82b and earnings per share (EPS) of US$11.64 in 2027. So the consensus seems to have become somewhat more optimistic on ResMed's earnings potential following these results.
See our latest analysis for ResMed
The consensus price target rose 5.4% to US$265, suggesting that higher earnings estimates flow through to the stock's valuation as well. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values ResMed at US$320 per share, while the most bearish prices it at US$210. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that ResMed's revenue growth is expected to slow, with the forecast 2.4% annualised growth rate until the end of 2027 being well below the historical 11% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.3% annually. Factoring in the forecast slowdown in growth, it seems obvious that ResMed is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards ResMed following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that ResMed's revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on ResMed. Long-term earnings power is much more important than next year's profits. We have forecasts for ResMed going out to 2029, and you can see them free on our platform here.
You can also see our analysis of ResMed's Board and CEO remuneration and experience, and whether company insiders have been buying stock.
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