ResMed Inc (ASX: RMD) shares have been a top performer in the ASX healthcare sector so far in 2024.
Currently trading at $32.78 per share, this respiratory care player's stock is up more than 29% since January and 17% in the past twelve months.
It has outperformed the benchmark S&P/ASX 200 Index (ASX: XJO) by more than 9% over the past 12 months, offering a significant advantage.
Here's why experts are bullish on Resmed shares.
Resmed shares in favour
Experts are bullish on the respiratory device company's stock price for a multitude of reasons, but three common 'themes' emerge amongst analyst opinions.
1. Dominant market position, minimal competition
ResMed holds a dominant position in the sleep disorder treatment market with its devices for treating obstructive sleep apnea (OSA).
Hyperion Asset Management says the business faces little to no credible competition in doing so.
According to my colleague Tristan, the firm points to ResMed as one of five ASX 200 companies that truly have "no credible competition."
This stronghold allows the company to maintain robust margins and sales, helping ResMed shares along the way.
In my view, this is an enduring competitive advantage which could mean Resmed's long-term growth potential remains intact.
2. Financial performance and growth
ResMed's financials are worth noting too. In Q4 FY24, the company reported a 9% increase in revenue, reaching US$1.2 billion.
This growth was underlined by strong demand for its sleep devices and masks, alongside a booming Software as a Service (SaaS) business. Funny – Resmed is behaving a bit like a software company.
Moreover, ResMed's gross margin improved by 350 basis points, leading to quarterly earnings per share (EPS) of US$1.98.
Analysts have taken note of this performance. Morgans rated the stock a buy with a price target of $35.93. It says the business is "remains well placed and uniquely positioned as it builds a patient-centric, connected-care digital platform…".
Macquarie shares this optimism, also rating the stock a buy with the same price target. Both brokers see ResMed's steady growth and robust financials as key reasons for their positive outlook.
3. Resilience in a volatile market
ResMed shares have proven their resilience in volatile share market conditions. While many ASX 200 stocks have struggled so far in FY25, ResMed shares have been buoyant.
They are up more than 9% in the past month of trade. One reason might be the underlying condition Resmed treats, in my opinion.
Brokers continue to highlight the vast potential market for ResMed, estimating an addressable market of more than 1 billion people.
Not only is this an enormous market to sell into, but it isn't sensitive to the business cycle. The number of home loans doesn't impact how many people have OSA, for instance.
This is a characteristic of high-quality ASX healthcare shares, in that they are defensive in times of volatility, as healthcare itself is a defensive sector.
Both Morgans and Macquarie mention this in their analyses.
Resmed shares takeaway
Experts say ResMed shares continue to be well-positioned for the future. Low competition, financial growth, and a strong market position are standout factors.
However, as always, remember to conduct your own due diligence and consult professional advice when needed.
