Resmed - Ready to Re Accelerate

Resmed (ASX: RMD) A$ 28.44 - is a classic and highly successful founder-led business, that sells CPAP (continual positive airway pressure) devices to patients suffering obstructive sleep apnoea (OSA). RMD has delivered 15% pa EPS growth with 20% pa plus ROE growth.

RMD has been aggressively sold off in the wake of the perceived potential impact of GLP-1 drugs that may impact sales for RMD’s products.

However, we believe that this selldown is a massive opportunity for investors. Feedback suggests that RMD remains the strongly preferred CPAP standard of care, with physicians tending to view GLP-1s as an adjunctive OSA therapy to CPAP and demand tends for CPAP sector remain extremely strong.

The sudden focus on weight and health from GLP-1 launch has substantially increased awareness of OSA, a particular under-diagnosed condition, which is increasing the number of patients looking for a solution.

RMD has estimated that the potential global OSA market is approximately 1 billion people, with just 23.5 million people connected to RMD devices as FY23. Hence, the long and steady growth that RMD will benefit from being the number 1 player is OSA treatment.

With regard to valuation RMD is currently trading on a forward price to earnings multiple that is a significant discount to where it has traded historically, and even more so relative to the broader market.

We think RMD offers a compelling BUY for long term investors.