ResMed Inc (ASX: RMD) shares are lifting on Tuesday morning.
At the time of writing, the sleep treatment company's shares are up almost 2% to $28.98.
This means its shares are now up over 7% since this time last week.
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Why are ResMed shares rising again?
Investors have been buying the company's shares again on Tuesday after its main competitor Koninklijke Philips NV (NYSE: PHG) was dealt another major blow.
Overnight the Dutch health technology company revealed that it will not sell new sleep apnoea devices in the United States in the coming years while it works to comply with a settlement with the Food and Drug Administration (FDA).
This follows the 2021 recall of millions of Philips' breathing devices and ventilators amid concerns that the foam used on the device to reduce noise could degrade and become toxic. The company stated:
In the US, Philips Respironics will continue to service sleep and respiratory care devices already with healthcare providers and patients, and supply accessories (including patient interfaces), consumables (including patient circuits), and replacement parts (including repair kits). Until the relevant requirements of the consent decree are met, Philips Respironics will not sell new CPAP or BiPAP sleep therapy devices or other respiratory care devices in the US.
This is a big positive for ResMed in the enormous United States market. In fact, Goldman Sachs recently spoke about the massive opportunity that the Philips recall has given the company. So, the longer it is absent from the United States, the better for ResMed. Goldman said:
The PHIA recall (ordinarily 35-50% of market supply) has afforded RMD a generational opportunity to capture market share. While supply chain challenges have limited the upside from the recall to date, the rollout of the card-to-cloud OSA flow generators should bridge a majority of the deficit through to an easier period for component shortages. We see clear scope for market share gains (on top of the typical MSD/HSD market growth) to accelerate […]. We also see further upside to this growth trajectory if the PHIA recall is extended.
Goldman currently has a buy rating and $33.50 price target on ResMed's shares.
