The ResMed Inc (ASX: RMD) share price could be in the buy zone.
That's the view of analysts at Goldman Sachs following the release of the sleep treatment company's fourth quarter update.
What did the broker say about the ResMed share price?
Despite a decent rally in recent months, the broker still sees plenty of value in the ResMed share price.
According to the note, Goldman has retained its buy rating with an improved price target of $36.80.
Based on the current ResMed share price of $33.40, this implies potential upside of over 10% for investors over the next 12 months.
Goldman commented:
We continue to see a long-duration runway of HSD organic growth for RMD, and we believe that growth-adjusted valuation of 3.1x (sector 2.9x) is not demanding in the context of various near/long-dated tailwinds.
Why is Goldman bullish?
The broker has previously spoken about how it believes ResMed could be well-placed to benefit from a backlog of patients waiting to be diagnosed following the pandemic.
And while it sees some risk from these potential patients moving to alternative therapies, it feels the majority will wait and stick with the company's products.
It explained:
There is a 12-18 month backlog of new patients waiting to be diagnosed. While there is a risk these prospective patients may switch to alternative therapies (e.g. dental sleep, neurostimulation), the degree of movement towards these substitutes has been relatively minor against the size of the CPAP market. Instead, we believe the backlog of new patients may add upside risk to our estimates if there is a material realisation of incremental devices/masks sales to new patients in FY23/24 (supply chain pressures permitting).
All in all, this could make the ResMed share price good value for investors that are looking for quality long term options.
