Citi raises ResMed stock price target to AUD45 citing strong EPS growth

On Monday, Citi analysts adjusted their outlook on ResMed stock, raising the price target to AUD45 from AUD44 while maintaining a Buy rating. This adjustment follows ResMed’s in-line third-quarter results and reflects anticipated improvements in earnings per share (EPS) for fiscal years 2025 to 2027. According to InvestingPro data, ResMed maintains a "GREAT" financial health score of 3.46, with seven analysts recently revising their earnings estimates upward.

Citi analysts highlighted that the updated price target implies a fiscal year 2027 price-to-earnings ratio of 24x, aligning with pre-pandemic levels. They expressed confidence in ResMed’s valuation, noting a projected compound annual growth rate (CAGR) of 15% in EPS from fiscal year 2024 to 2027, alongside robust free cash flow generation exceeding $1.5 billion over the trailing twelve months. The company currently trades at a P/E ratio of 27.4x, which InvestingPro analysis suggests is reasonable relative to its near-term earnings growth potential.

The analysts also pointed out ResMed’s strong balance sheet, characterized by a net cash position. With a low debt-to-equity ratio of 0.15 and current ratio of 3.41, ResMed’s liquid assets comfortably exceed its short-term obligations. They mentioned that GLP-1s have not yet impacted ResMed’s business, although the company expects increased promotional activity from sponsors in the second half of calendar year 2025. The potential effects of GLP-1s and wearables on ResMed’s market share remain a topic of discussion. Want deeper insights? InvestingPro offers comprehensive analysis with 12 additional ProTips and detailed financial metrics for ResMed.

Furthermore, Citi analysts noted the uncertainty surrounding Philips’ return to the U.S. market, which they continue to anticipate by July 1, 2027. Despite this, they maintain a positive outlook on ResMed’s stock, reaffirming their Buy rating. The company’s solid revenue growth of 9.54% and strong market position support this positive outlook.

In other recent news, ResMed has reported its fiscal third-quarter 2025 results, revealing a 9% year-over-year revenue increase to $1.29 billion, aligning with Wall Street expectations. The company’s earnings per share (EPS) were slightly below consensus, at $2.37 compared to an estimate of $2.39. Analysts have responded with varying assessments; UBS maintained a Buy rating with a $285 target, while Stifel held its Hold rating with a $240 target. RBC Capital raised its price target to $255, citing robust revenue growth and tariff exemptions. Meanwhile, Piper Sandler lowered its target to $248, noting mixed results with strong mask sales but weaker device sales.

KeyBanc increased its price target to $274, highlighting the company’s improved gross margins and favorable tariff conditions. ResMed’s management announced a significant exemption from U.S. import tariffs under the Nairobi Protocol, which is expected to mitigate cost pressures. The company’s ongoing innovation in sleep disorder treatments, such as the promising SynAIRgy Phase 3 trial by Apnimed, continues to draw attention from analysts. These developments underscore the complex landscape ResMed navigates as it balances growth opportunities with market uncertainties.

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