ResMed Inc (ASX: RMD) shares have been on a roll in 2024.
Since the start of the year, the sleep disorder treatment company's shares have risen over 45%.
Investors have been buying the company's shares after its strong growth continued despite the emergence of weight loss wonder drugs that some felt would disrupt its market.
But can ResMed's shares keep rising or have they peaked now? Let's take a look at what one leading broker is saying about the company.
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Where next for ResMed shares?
According to a note out of Ord Minnett, its analysts believe that the company's shares can keep rising from here.
In response to the company's quarterly update last month, the broker has reaffirmed its accumulate rating with an improved price target of $40.05 (from $39.25). This suggests that further upside of over 8% is possible from current levels.
Ord Minnett was impressed with ResMed's performance during the three months, noting that its result was ahead of expectations. It said:
The company delivered a strong September quarter result, with 11% revenue growth translating to 35% earnings per share growth. Revenues were 3% ahead of consensus due to higher rates of flow generator growth. The gross margin of 59.2% aligned with expectations, while operating expenses were slightly ahead of forecasts. Net operating cash flow increased by 14% compared to the previous corresponding period, despite higher inventory due to rebalancing sea versus air freight. Net debt fell, while the value of share buyback program was boosted.
Another positive that went down well with the broker was that management lifted its earnings guidance for the full year. This appears to have given Ord Minnett greater confidence that ResMed can grow its earnings in the double digits for the coming years. As a result, it feels that this justifies its premium valuation. The broker concludes:
ResMed upped it FY25 EPS guidance thanks to jump higher flow generator revenues. Revenue growth for the current quarter is forecast at 10%. We forecast the company will be able to generate annualised EPS growth of 13% for the next few years, which justifies its current trading multiples. We ticked our price target up from $39.25 to $40.05 following the quarterly.
It is worth noting that Ord Minnett isn't the only broker that is positive on ResMed's shares.
Analysts at Morgans recently put an add rating and $41.33 price target on its shares, whereas Macquarie put an outperform rating and $41.10 price target on them.
