• Earlier this week, Morgan Stanley downgraded ResMed, highlighting concerns that GLP-1 weight-loss drugs and Philips’ return to the U.S. PAP market could pressure the company’s margins and growth prospects.
• This reassessment underscores how quickly sentiment can shift for sleep and respiratory care providers when pharmaceutical advances and competitive shifts potentially alter treatment pathways.
• We’ll now explore how Morgan Stanley’s concerns about GLP-1 therapies potentially reducing sleep apnea device demand may reshape ResMed’s investment narrative.

Find 45 companies with promising cash flow potential yet trading below their fair value.

ResMed Investment Narrative Recap

To own ResMed, you have to believe sleep and respiratory care remain essential even as treatments evolve, and that its devices, masks, and software keep a central role in managing sleep apnea. Morgan Stanley’s downgrade puts a sharper spotlight on two near term swing factors: how far GLP 1 obesity drugs could chip away at device demand, and how aggressively Philips competes as it reenters the U.S. PAP market. If either plays out worse than expected, margins look more exposed.

Against that backdrop, the most relevant recent update is ResMed’s April quarter, where management reported higher sales and net income year on year and reaffirmed its dividend. Those results show the current business is still generating solid earnings, even as the share price has pulled back and analysts debate the impact of GLP 1 therapies and Philips’ return. Whether that financial resilience can offset a tougher competitive and treatment backdrop is what I will be watching most closely.

Yet while GLP 1 therapies might expand the treated patient pool, there is also a real risk that changing payer behavior could...

ResMed's narrative projects $6.9 billion revenue and $2.0 billion earnings by 2029.

Uncover how ResMed's forecasts yield a $270.60 fair value, a 43% upside to its current price.

Exploring Other Perspectives

Some of the most optimistic analysts were once modeling revenue at about US$7.0 billion and earnings near US$2.1 billion by 2029, assuming GLP 1 therapies ultimately deepen PAP adoption, not threaten it. That is a much rosier story than the current downgrade narrative, and it shows how far opinions can differ. As new data on GLP 1 usage and Philips’ return emerge, you may find that both the bullish and cautious cases need to be revisited.

Explore 7 other fair value estimates on ResMed - why the stock might be worth as much as 47% more than the current price!

Reach Your Own Conclusion

Don't just follow the ticker - dig into the data and build a conviction that's truly your own.

• A great starting point for your ResMed research is our analysis highlighting 4 key rewards that could impact your investment decision.
• Our free ResMed research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate ResMed's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.