RMD — ResMed Inc.

The market's read on RMD as of 2026-09-13 is best described as respectful but unexcited. The August 6, 2026 fiscal Q4 print was a genuine beat - revenue $1.4636B (+9% YoY, +8% constant currency), non-GAAP EPS $2.95 (+16% YoY) versus ~$2.89 consensus - but GAAP optics were muddied by a ~$41.9M field safety notification charge tied to Astral ventilators, which knocked Q4 GAAP operating margin to 30.7% from 35.0% in the March quarter. Analyst positioning reflects the split: 13 Buy, 17 Hold, 5 Sell, consensus rating 'Hold', average target $239.90 (recent average $245.08, range $213-$300). KeyBanc nudged its target to $267 (Overweight) on August 30, while Wells Fargo and Piper Sandler stayed neutral with $215-$225 targets. Price action confirms the mood: +12.06% over three months but -3.42% over one month and -4.41% over the last week, i.e. the post-earnings rally has faded. The GLP-1 overhang has stopped being the dominant story - real-world data on 1.7 million patients shows GLP-1/PAP combination users with 5.1% higher 2-year and 6.2% higher 3-year adherence - but it hasn't been replaced by a growth narrative aggressive enough to justify a higher multiple.

Revenue is a rock-steady, non-accelerating ~10% compounder with no inflection in either direction. Quarterly revenue has risen sequentially every quarter in the dataset, from $1.1023B (Sep 2023) to $1.4636B (Jun 2026), +33% over 11 quarters. YoY growth by quarter: +11.1% (Sep'24), +10.3% (Dec'24), +7.9% (Mar'25), +10.2% (Jun'25), +9.1% (Sep'25), +11.0% (Dec'25), +10.8% (Mar'26), +8.6% (Jun'26). Nothing here is breaking out or breaking down. The more interesting story is margin: gross margin climbed from 54.4% (Sep 2023) to 62.2% (Dec 2025 and Mar 2026) - a genuine structural ~780bp improvement from supply-chain and freight normalization - then printed 58.8% in the June 2026 quarter. That dip is a one-off, not a trend: add back the ~$41.9M Astral charge and Q4 gross margin is roughly 61.7%, and Q4 operating margin goes from 30.7% to ~33.5%, in line with the prior three quarters (34.9%, 35.0%, 33.4%). Diluted EPS tells the same story of steady compounding with a charge-driven blip: $1.49, $1.42, $2.04, $1.98, $2.11, $2.34, $2.48, $2.58, $2.37, $2.68, $2.71, $2.64 - the $2.64 in Jun 2026 is the only sequential decline in two years, and it is explained. Verdict: stable, high-quality, mid-single-to-low-double-digit growth with structurally better margins; the June quarter is a blip, not the start of compression.

Cheap relative to its own history, fair-to-slightly-cheap in absolute terms. As of 2026-09-13, RMD traded at $218.27 on TTM EPS of $10.527, a 20.9x trailing P/E versus a 5-year average of 29.52x - a ~29% discount. Price/sales is 5.6x versus a 5-year average of 6.87x (-18%). On forward numbers it looks better still: consensus next-FY EPS of $12.094 implies a forward P/E of ~18.0x and ~14.9% EPS growth off the TTM base, so the headline PEG of 2.24 (which divides the trailing 20.9x by trailing growth of roughly 9%) badly overstates the expensiveness. The balance sheet is a net-cash position ($1.469B cash versus $399M long-term debt, debt/equity 0.125, current ratio 3.1), ROIC is 19.1%, ROE 23.1%, and the dividend yields 1.08% after a 10% raise to $0.66/quarter. A 14.4x EV/EBITDA is cheap for a business with 61% gross margins and 33% operating margins. The honest caveat: the de-rating from ~29x to ~18x forward is not an accident - growth settled from 20%+ in FY2021-22 to ~10%, and the market no longer pays a hyper-growth multiple for a steady grower. That is a legitimate structural re-rating, not pure sentiment, which caps how much multiple expansion you can underwrite.

The cleanest way to read the setup: the market is paying ~18.0x forward EPS for a company whose consensus estimates imply ~14.9% EPS growth (from $10.527 TTM to $12.094 next year). That is a multiple that does not price in the growth it is being handed, and it is roughly 40% below where this stock traded on trailing earnings for most of the last five years. Either the Street's $12.09 is too optimistic, or the shares are cheap. The five Sell ratings and 17 Holds suggest the buy-side's real worry is not GLP-1 any more - that debate has cooled on the adherence data - but simply whether ~10% revenue growth and high-single-digit device volume growth can coexist with a 20x-plus multiple in a world where MedTech multiples have compressed. Practical framing: the earnings report to trade off is Q1 FY2027 in late October 2026. If revenue growth comes in at or above 10% and gross margin returns above 61.5% excluding any new field actions, the forward multiple has room to move from 18x toward the low 20s - that's the path to my ~$242 fair value. If growth prints below 8%, 18x is roughly the right price and the stock chops between $200 and $230. Note that Q4 FY2026's optically soft GAAP numbers (the Astral charge) may have caused some screens and unadjusted models to understate the run-rate - that is a setup that can be corrected by a clean Q1.

Range-bound with a mild negative tilt, and not yet washed out. As of 2026-09-13: RSI(14) at 42.28 - neither oversold nor overbought, so no classic bounce signal. Price of $218.27 sat below the 20-day (-4.58%, implying the 20-day is near $228.7) and below the 200-day (-4.21%, implying ~$227.9), but just above the 50-day (+0.60%, implying ~$217.0). That is a very specific setup: the 50-day is acting as support right at the current price, while the 20-day and 200-day are clustered overhead around $228 as a resistance shelf. Returns of +12.06% over three months against -3.42% over one month and -4.41% over one week say the three-month recovery has stalled and rolled over. The stock is ~23% below its $284.87 52-week high and roughly a third of the way up a $180.27-$284.87 range. Timing implication: this is a scale-in tape - add on weakness toward the $210s or on a confirmed reclaim of ~$228 - not a momentum tape and not an oversold-knife-catch. A decisive break of ~$210 would put the $180-190 area back in play, which is where the risk/reward becomes genuinely compelling.

• GLP-1 narrative normalization: the structural overhang has defused rather than disappeared. Real-world compliance data across 1.7 million patients shows GLP-1 users on PAP therapy with 5.1% higher adherence at 2 years and 6.2% at 3 years, which reframes GLP-1s as complementary rather than cannibalistic - but any label expansion of GLP-1s into mild/untreated obstructive sleep apnea would reopen the bear case instantly.
• Interest rates and duration: RMD's 0.766 beta and net-cash balance sheet ($1.469B cash vs $399M long-term debt) make it largely immune to financing costs; the exposure is to discount-rate-driven multiple expansion in MedTech, which helps if rates fall and hurts if they rise.
• Supply chain and freight normalization: the single biggest driver of the FY2026 margin story (non-GAAP gross margin +240bp to 62.4%). This tailwind is now largely harvested, so incremental margin gains from here have to come from mix, pricing, and manufacturing efficiency - a harder, slower source.
• Defensive sector rotation: sleep-disordered breathing diagnosis and treatment is non-cyclical, which tends to attract flows when macro growth worries increase; conversely RMD tends to lag in aggressive risk-on rotations where investors want cyclical beta rather than steady compounders.
• Reimbursement, regulation, and product field actions: mask/accessory resupply rules and competitive bidding in the US, plus EU reimbursement dynamics, affect both volume and price; periodic device safety notifications (the Astral ventilator notification is the current example) create regulatory headline risk and unpredictable GAAP charges.

• Morgan Stanley Global Healthcare Conference, September 15, 2026 - the first public management forum after FY2026 results, with potential detail on FY2027 strategy, the newly initiated forward guidance framework, and Noctrix integration milestones.
• Q1 FY2027 earnings, expected around October 29, 2026 - the first hard quarterly read on early-FY2027 device demand, and the quarter that should show a clean gross margin (>61.5%) with the Astral charge behind it.
• Continued realization of the supply chain savings that drove +240bp of FY2026 gross margin improvement, plus operating leverage on a 62%+ gross margin base.
• Portfolio reshaping: the completed MatrixCare divestiture to Frazier Healthcare Partners simplifies the story toward the higher-margin Sleep and Breathing franchise, while the Noctrix Health acquisition brings the FDA De Novo-cleared Nidra device for restless legs syndrome - a genuine adjacent indication with a device-based reimbursement path.
• Capital return: the 10% dividend increase to $0.66/quarter (payable September 24, 2026) plus continued buybacks, funded from ~$1.6B of FY2026 free cash flow, with rising likelihood of further increases given the net-cash position.

• Growth is not accelerating, and at ~18x forward there is little cushion: revenue growth has been pinned in an 8-11% band for eight straight quarters. A slip below 8% would likely trigger both estimate cuts and multiple compression - the double hit.
• GLP-1 label expansion into milder sleep apnea populations would shrink the diagnosable funnel ahead of treatment, the one scenario the current adherence data does not cover.
• Competitive pressure in masks and devices as Philips rebuilds its sleep business post-recall and Fisher & Paykel continues to press, risking price and share in the highest-margin consumables line.
• Recurring field safety actions: the $41.9M Astral ventilator notification charge is manageable in isolation, but a pattern of device notifications would hit GAAP earnings, invite regulatory scrutiny, and could escalate into a recall-scale event.
• Structural multiple risk: the de-rating from a ~29.5x five-year average P/E to ~20.9x trailing is a re-rating of a slower-growth business, not a temporary dislocation. If 10% revenue growth is the new normal, the multiple may simply stay here and the stock could be dead money for years even while the business executes.

ResMed is a genuinely high-quality business available below its own historical valuation - 61% gross margin, 33% operating margin, 19.1% ROIC, 23.1% ROE, $1.469B of cash against $399M of debt, ~$1.6B of annual free cash flow, and a dividend just raised 10% - trading at ~18.0x FY2027 consensus EPS of $12.094 against a 5-year average trailing P/E of 29.5x. The June 2026 quarter's ugly GAAP optics were a ~$41.9M Astral charge, not deteriorating demand: revenue still grew 8.6% and adjusted operating margin was in line with the prior three quarters. The GLP-1 fear that de-rated this stock has, so far, shown up in the multiple rather than the P&L. The counterweight is real: this is a ~10% revenue grower, not the 20% grower that earned a 29x multiple, and the technicals are soft (below the 20-day and 200-day, RSI 42). My conclusion is a quality-compounder buy on weakness, not a momentum buy - the risk/reward is favorable at $218 with ~11% upside to my ~$242 fair value plus a 1.1% dividend, but the position sizing should respect that a break below ~$210 re-opens the $180s.

Two converging methods, both run off the FMP data as of 2026-09-13. Primary: 20x FY2027 consensus EPS of $12.094 = $241.88 - a multiple deliberately set between the current ~18.0x forward and the 29.52x five-year trailing average (which was inflated by the 2020-21 device-demand boom), and justified by ~14.9% forward EPS growth, 62%+ gross margin, 33% operating margin, 19.1% ROIC, and a net-cash balance sheet, without assuming a full re-rating back to history. Cross-check: 16x EV/EBITDA on ~$2.12B of FY2027E EBITDA (FY27E revenue of $5.810B at a ~36.5% EBITDA margin) = $33.94B enterprise value, plus $1.070B net cash ($1.469B cash less $399M long-term debt), divided by 145.06M shares (market cap $31.66B / $218.27) = ~$241. Both methods land at ~$241-242, so I set $242.00, implying ~10.9% upside from the 2026-09-13 price plus a 1.1% dividend yield.