Shares in Resmed Inc. (ASX: RMD) are back in focus as the company readies to report tomorrow (ASX Reporting Calendar). Investors are showing eagerness with the share price 1.1% higher to $36.72 in afternoon trade.
Investors are still waiting with bated breath to hear more about the company’s latest sleep apnoea product. The team at Alphinity Investment Management believes the Resmed AirSense 11 could act as a major catalyst for the company.
Could this push the Resmed share price higher?
The Alphinity Australian Share Fund is a diversified portfolio of 35 to 55 stocks selected based on quantitative and fundamental analysis. The fund has delivered investors a net return of 28.4% over the past year. This was roughly in line with the S&P/ASX 300 Accumulation Index return of 28.5%. One of those companies is ASX healthcare titan, Resmed.
In its June quarterly report, Sydney-based boutique investment manager recapped the performance of its Australian Share Fund. On top of that, the fund manager put forward its outlook for the portfolio.
The Alphinity team shared an optimistic perspective towards Resmed, stating:
Resmed has had some challenges with the lagged impact on demand for its sleep apnea products due to a decline in sleep diagnostics during Covid. Testing is now recovering and a significant global product recall by its major global competitor, coinciding with Resmed’s launch of its new S11 airflow generator, is also providing the company with an opportunity for a step-change in market share globally.
The competitor mentioned by the fund manager is Philips. Collectively, ASX-listed Resmed and Philips cater to 90% of the global obstructive sleep apnoea (OSA) devices market and 85% of global OSA markets.
As a result of the 3 to 4 million Philips device recall, Alphinity considers the current landscape to be a considerable opportunity for Resmed. The release date of the healthcare company’s AirSense 11 is yet to be announced, however, it will likely be brought forward.
Are ASX investors sleeping on Resmed?
While the sleep apnoea company took a hit from COVID last year, the fund manager anticipates a recovery in the market. Additionally, the Philips recall opens the gate wide for Resmed to capitalise on expanding market share.
Admittedly, the Resmed share price trading on a price-to-earnings (P/E) ratio may seem expensive. However, the fund believes the market is underestimating the potential earnings upside for the business. ASX-listed Resmed is up 27.9% over the past year.
Lastly, don’t forget to check back tomorrow for its Q4 FY21 results.