ResMed Inc (ASX: RMD) shares have been on an interesting journey this year to date. The stock is around 20% higher since January, and hit yearly highs of $33.10 in May after a volatile period.
This pertains to the market's response to various announcements regarding GLP-1 weight loss medications, which have had far-reaching effects.
The thinking is that these compounds could impact everything from obesity and blood pressure to lifestyle and food choices, including respiratory and sleep disorders. Naturally, companies in the healthcare industry have seen their share prices wobble as new studies emerge on these drugs.
In fact, despite their impressive run in 2024, Resmed shares are currently trading at $30.49, down more than 6% over the past 12 months.
Despite this decline, some analysts believe now is a good time for investors to consider adding this ASX 200 healthcare stock to their portfolios.
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Resmed shares rated buy
Brokers are generally bullish on Resmed shares. According to CommSec, consensus rates the company a buy.
Bell Potter is one of those firms. It points to the company's consistent annual profit before tax increases and a 7% revenue boost in Q3 FY 2024.
Analyst Christopher Watt believes ResMed's growth trajectory is solid, despite recent concerns over the impact of weight loss drugs, according to The Bull.
This means it could be undervalued, offering "an attractive entry level" to buy the stock.
[Resmed] shares suffered in the first half of fiscal year 2024 over investor concerns regarding the potential negative impact that weight loss and diabetes drugs could have on its business.
However, RMD lifted revenue by 7 per cent in the third quarter of fiscal year 2024 when compared to the prior corresponding period. Income from operations increased by 25 per cent. In our view, RMD is undervalued and presents an attractive entry level for long term investors.
Earlier in the year, the broker estimated that more than a billion people worldwide suffer from obstructive sleep apnoea (OSA), with many remaining undiagnosed. This could be a tailwind for ResMed, it says.
Bell Potter has set a price target of $36.00 for ResMed shares.
Morgans also rates Resmed a buy. According to my colleague James, it sees weight loss drugs as "having little impact on the large, underserved sleep disorder breathing market…".
It has a price target of $34.11 on Resmed shares, around an 11.5% upside potential at the time of writing.
Fundies are also bullish on Resmed. ECP Asset Management finds ResMed's valuation very appealing. Wilsons' analysis supports this view, noting that ResMed trades at a significant discount to its historical price-to-earnings (P/E) multiples.
It expects the ASX healthcare stock to rise as concerns about GLP-1 weight loss drugs ease, allowing the market to focus on ResMed's fundamentals.
Foolish takeaway
Despite market concerns about the impact of GLP-1 weight loss drugs, many experts believe these concerns are overblown for Resmed shares.
Whether or not they are correct remains to be seen. The stock is down around 4.5% in the past month.
As always, broker opinions are just that – opinions. Remember to conduct your own due diligence.
