The ResMed Inc. (ASX: RMD) share price has been a strong performer over the last 12 months.
During this time, the sleep treatment specialist's shares have risen 20%.
This is almost twice the return of the S&P/ASX 200 Index (ASX: XJO) over the same period.
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Where next for the ResMed share price?
The team at Goldman Sachs has been running the rule over the ResMed share price following its appearance at the GS Healthcare CEOs Unscripted Conference 2022.
And while the broker has only retained its neutral rating on ResMed's shares, its price target of $37.20 implies attractive potential upside of 10.5% over the next 12 months.
What did the broker say?
According to the note, ResMed sees clear scope for tailwinds from the Philips recall to persist beyond 2022. Goldman highlights that the company has run various scenarios on how and when Philips will return to market as it continues to execute on its product recall.
Goldman commented: "Whilst RMD acknowledges some risk that PHIA [Philips] may choose to complete strongly on price as/when it does return to market, it sees a far greater likelihood that any share gains recovered will be far more easily done so from the secondary/tertiary players that have also benefited from the current disruption."
However, its analysts note that current supply chain challenges for semiconductors are restricting ResMed's opportunity.
The broker explained: "RMD stated that the $300-350m recall tailwind guided for FY22 would be substantially higher were it not for challenges around component availability (we estimate approximately double). Management reiterated commentary from the 1Q22 result in October, stating that the availability of components and outbound distribution could contribute to incremental challenges in both 2Q and 3Q (sequentially vs. 1Q), but remains confident in conditions improving from 4Q."
This is being compounded by elevated freight and distribution costs. Though, pricing has been strong and looks set to offset much of this.
Finally, Goldman highlights that new diagnoses are averaging 90% to 100% of pre-pandemic levels across its global business despite Omicron, its software as a service business is on track to return to growth in FY 2022, and management believes it has a big opportunity with its home-based nasal high-flow therapy.
