The ResMed Inc. (ASX: RMD) share price is having another disappointing session on Monday.
In morning trade, the sleep treatment company's shares are down 6.5% to a 52-week low of $28.70.
This means that its shares are now down 15% over the last two trading sessions following the release of a weaker-than-expected quarterly update.
Why is the ResMed share price sinking again?
Investors have been hitting the sell button today after the company's NYSE-listed shares fell more than expected on Friday night.
Each ResMed share on the NYSE represents 10 on the ASX. This means they are inextricably linked and will usually move in tow with one another.
On Friday night, the ResMed share price fell 18% to US$179.88 (including after-hours trade). This equates to A$273.28 at current exchange rates, which suggests that fair value for its locally listed shares is now $27.33.
Is this a buying opportunity?
The team at Goldman Sachs believes investors should be snapping up shares following this selloff.
While the broker was disappointed with ResMed's update, it believes that the margin weakness, which caused the earnings miss, will soon improve. Goldman said:
FY23 gross margin of 56.5% remains -330bps below FY20 levels, with a sequential deterioration of 30bps from 3Q to 4Q the primary driver of a (5)% earnings miss today (sales growth of +23% was approximately double the 10-year average).
However, in the context of various unprecedented market dynamics, the factors suppressing GM are generally understandable and likely to improve: 1) ongoing competitor challenges skewing sales mix heavily to devices over masks/consumables; 2) elevated freight costs tapering down but more slowly than anticipated; 3) component/other input cost inflation proving stubborn.
In light of this, its analysts have retained their buy rating with a $38.40 price target.
Based on the current ResMed share price, this implies a potential upside of approximately 33% for investors over the next 12 months.