Last Friday, Resmed CDI (ASX: RMD) reported its fourth-quarter and full-year financial results. Investors may be wondering whether to buy Resmed Shares.
Resmed hit an all-time high of $44.12 last Friday. Its shares are now up 16% for the year to date, and 52% over the past 5 years.
Resmed is widely regarded as one of the highest-quality growth companies on the ASX. Those interested in Resmed shares may be wondering whether it's too late to invest.
What happened?
Resmed's FY25 results did not disappoint.
The sleep disorder treatment company delivered a 10% increase in revenue compared to a year ago. This drove a 19% increase in operating profit.
What does this mean for future returns?
JP Morgan's take
After reviewing its FY25 results, JP Morgan Chase & Co (NYSE: JPM) gave its take on Resmed shares.
The broker noted that this was Resmed's best quarterly gross margin in a decade. Resmed increased its gross margin by 150 basis points, which was more than 100 basis points ahead of JP Morgan's forecast. The good news for investors is that the ASX 200 healthcare stock is forecasting further improvement.
It wasn't too long ago that Resmed faced supply chain and logistics challenges after the Phillips recall.
Back in 2021, competitor Philips Respironics initiated a voluntary recall of certain sleep devices due to potential health risks. As a result, demand for Resmed dramatically increased.
JP Morgan said this latest result proves that supply chain challenges associated with that recall, as well as COVID, are now "fully in the rear-view mirror".
Commenting on the future, the broker said:
The company is now turning its attention to market growth, given its dominant device share and the potential for faster growth with the GLP-1s/ wearable tailwinds. We are encouraged by the early signs, especially reports of increased CPAP prescriptions from clinicians attending ResMed-supported education programs.
Resmed continues to guide mid-single-digit growth in the device market. According to JP Morgan, given its market dominance in the US, with around 90% share, the company is investing to boost market growth.
What does JP Morgan think Resmed shares are worth?
As investors know, a great earnings result doesn't always mean the stock is a buy today. The valuation also has to be attractive.
However, in this case, JP Morgan has maintained its 'overweight' rating on the stock.
It also increased its price target from $45 to $48 after reviewing the result.
Given that shares closed at $42.88 on Friday, this suggests a 12% upside over the next 12 months.
Foolish Takeaway
Despite reaching a new all-time high, JP Morgan has rated Resmed a buy after reviewing its latest results.
Retail investors are often drawn to 'buy in the dip' opportunities. However, high-quality growth companies can continue growing at market-beating rates over a long period of time. JP Morgan believes Resmed shares fit that category.
