Wondering whether you should buy Resmed Inc (ASX: RMD) shares following its recent update?
Well, the team at Macquarie Group Ltd (ASX: MQG) thinks it would be a smart move.
What is the broker saying?
Macquarie was pleased with Resmed's performance during the first quarter, highlighting that its result was in line with expectations. It said:
1Q26 revenue rose 8% YoY (CC), which was in line with our forecasts. Compositionally, devices were 1% ahead of MRE due to RoW performance, which was offset by slightly softer growth in Mask/Accessories (-1% vs MRE) and RCS revenue (-3% vs MRE). Non-GAAP gross margin of 62.0% increased +280bps YoY, driven by manufacturing and logistics efficiencies and component cost improvements (+20bps vs MRE). Further, non-GAAP EBIT margin of 36.1% was up +290bps YoY (+55bps vs MRE) on lower than expected SG&A.
Another positive is that the company's outlook was also in line with expectations. This includes its gross margin, SG&A expense, and tax rate guidance being largely on target. It adds:
RMD expects non-GAAP gross margin of ~61-63% (MRE 62.0%); SG&A has increased to ~19-20% of sales (MRE 19.4%) to support the recent rebranding and several targeted direct-to-consumer marketing campaigns and R&D: ~6-7% of sales (MRE 6.4%). The FY26 tax rate is anticipated to be ~21-23% (MRE 21.9%) due to the impact of tax legislation in different areas in FY26.
What sort of returns are on offer with ResMed shares?
According to the note, Macquarie has retained its outperform rating and lifted its price target to $49.20 (from $48.60). Based on its current share price of $38.16, this implies potential upside of 29% for investors over the next 12 months.
And with the broker forecasting a modest 1% dividend yield over the period, the total potential return to approximately 30%.
Commenting on its outperform rating, the broker said:
Maintain Outperform as we expect solid EPS growth over the forecast period and a favourable balance sheet position. RMD remains our preferred sector exposure. Prior RMD research.
Valuation: We raise our DCF-derived TP by 1% to A$49.20, from A$48.60, on model roll- forward and updated FX. Catalysts: Progress in relation to new product launches, M&A activity, RoW regulatory approval of AirSense11.
Overall, this could make ResMed shares a great pick for investors that are looking for blue chips with the potential to deliver big returns between now and this time next year.
