The ResMed Inc (ASX: RMD) share price hit some rough patches in the financial year just past.
Shares in the S&P/ASX 200 Index (ASX: XJO) healthcare stock closed out FY 2023 trading for $32.81. On 28 June, the last trading day of FY 2024, shares ended the day changing hands for $29.10 apiece.
That saw the ResMed share price down 11.3% over the financial year.
For some context, the ASX 200 gained 7.8% over this same period.
Here's what happened.
Image source: Getty Images
What happened with the ResMed share price in FY 2024?
As you can see on the above chart, 3 August would have been an opportune time to sell your stock in the medical device manufacturer.
On 4 August, the ResMed share price closed the day down 9.3%. This slide would continue through to 25 September, by which point shares were down 36.7% from the 3 August close.
Investors began favouring their sell buttons following the release of the company's full-year results.
Although revenue for the 12 months to 30 June 2023 was up 18% year on year to US$4.2 billion, gross margins shrank in the final quarter. This saw the company's full-year gross margin decline by 0.8% to 55.8%, contrary to analyst expectations of improved margins.
The margin pressure looks to have come from higher manufacturing costs and an unfavourable product mix.
Now investors who bought the dip on 25 September will have seen the ResMed share price gain 35.7% from that day through to the end of FY 2024.
But those results could have been markedly better if not for the 13.2% sell-off on 24 June, the final week of FY 2024.
This came after pharmaceutical giant Eli Lilly And Co (NYSE: LLY) released some promising clinical test results from its sleep apnoea trial in the United States. Eli Lilly is evaluating tirzepatide to treat the condition in adults with obesity.
That success could potentially take a bite out of ResMed's own addressable market.
What's ahead for the ASX 200 healthcare share in FY 2025?
On Friday, the ResMed share price closed at $29.90, putting the ASX 200 stock up 2.75% in the early days of FY 2025.
But if Morgans is right, shares could run a lot higher from here.
"While weight loss drugs have grabbed headlines and investor attention, we see these products having little impact on the large, underserved sleep disorder breathing market, and do not view them as category killers," the broker recently noted.
Morgans added:
Although quarters are likely to remain volatile, nothing changes our view that the company remains well placed and uniquely positioned as it builds a patient-centric, connected-care digital platform that addresses the main pinch points across the healthcare value chain.
The broker has an 'add' rating on the ASX 200 healthcare stock with a $34.11 target for the ResMed share price. That's 14% above Friday's close.
