ResMed upgraded at RBC Capital Markets on Q4 positives

RBC Capital has upgraded ResMed's stock rating to Outperform from Sector Perform, citing an optimistic outlook for the company's sleep device growth. The firm raised its price target to $262 from $244, suggesting the stock may currently be undervalued. ResMed holds a dominant position in obstructive sleep apnea devices and accessories, which analysts believe will drive growth in the global OSA market.

The company's Americas Sleep devices experienced an 8% year-over-year increase in the fourth quarter of fiscal 2026, outperforming the company's mid-single digit growth estimate. Meanwhile, Rest of World Sleep devices saw a 13% year-over-year growth in constant currency. ResMed's $31.9 billion market capitalization trades at a P/E ratio of 21.41, and the company delivered a nearly 10% revenue growth over the last year.

Analysts predict ResMed can achieve high single-digit earnings per share growth over the next three years, assuming Philips Respironics returns to the U.S. market in fiscal 2028. ResMed has also focused on capital management and has increased its share buybacks while maintaining 14 consecutive years of dividend increases.

Notably, the FDA's class 1 recall for React Health's Luna G3 device may have provided a catalyst for ResMed's growth momentum in sleep devices. The ProTips feature of InvestingPro offers additional insights through a comprehensive Pro Research Report.

ResMed recently reported its fiscal fourth-quarter results, with non-GAAP earnings of $2.95 per share surpassing Wall Street's estimate of $2.89. However, revenue slightly missed expectations at $1.46 billion compared to the forecasted $1.47 billion. During the same period, KeyBanc raised its price target to $267 while maintaining an Overweight rating, expressing increased confidence in ResMed's fiscal year 2027 outlook.

Rothschild Redburn initiated coverage on ResMed with a Neutral rating and set a $230 price target, highlighting the ongoing structural barriers in the market.