The ResMed Inc. (ASX: RMD) share price has been a strong performer over the last 12 months.
During this time, the sleep treatment specialist’s shares have risen 20%.
This is almost twice the return of the S&P/ASX 200 Index (ASX: XJO) over the same period.
Where next for the ResMed share price?
The team at Goldman Sachs has been running the rule over the ResMed share price following its appearance at the GS Healthcare CEOs Unscripted Conference 2022.
And while the broker has only retained its neutral rating on ResMed’s shares, its price target of $37.20 implies attractive potential upside of 10.5% over the next 12 months.
What did the broker say?
According to the note, ResMed sees clear scope for tailwinds from the Philips recall to persist beyond 2022. Goldman highlights that the company has run various scenarios on how and when Philips will return to market as it continues to execute on its product recall.
Goldman commented: “Whilst RMD acknowledges some risk that PHIA [Philips] may choose to complete strongly on price as/when it does return to market, it sees a far greater likelihood that any share gains recovered will be far more easily done so from the secondary/tertiary players that have also benefited from the current disruption.”
However, its analysts note that current supply chain challenges for semiconductors are restricting ResMed’s opportunity.
The broker explained: “RMD stated that the $300-350m recall tailwind guided for FY22 would be substantially higher were it not for challenges around component availability (we estimate approximately double). Management reiterated commentary from the 1Q22 result in October, stating that the availability of components and outbound distribution could contribute to incremental challenges in both 2Q and 3Q (sequentially vs. 1Q), but remains confident in conditions improving from 4Q.”
This is being compounded by elevated freight and distribution costs. Though, pricing has been strong and looks set to offset much of this.
Finally, Goldman highlights that new diagnoses are averaging 90% to 100% of pre-pandemic levels across its global business despite Omicron, its software as a service business is on track to return to growth in FY 2022, and management believes it has a big opportunity with its home-based nasal high-flow therapy.
The post Here’s what this broker thinks of the ResMed (ASX:RMD) share price appeared first on The Motley Fool Australia.
Should you invest $1,000 in ResMed right now?
Before you consider ResMed, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and ResMed wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
- 5 things to watch on the ASX 200 on Monday
- 3 buy-rated ASX growth shares
- Broker tips ResMed (ASX:RMD) share price to rise over 20%
- In the green: Here are the 5 best ASX healthcare shares of 2021
- 3 top ASX growth shares to buy in January
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
from The Motley Fool Australia https://ift.tt/33kLX2x