ResMed RMD has achieved impressive growth over the past year, with its shares rallying 25.6%. It has outperformed the industry’s 13.1% rise and the S&P 500 composite’s 15.7% gain.

Presently carrying a Zacks Rank #2 (Buy), the renowned medical equipment company continues to gain from its widely adopted mask portfolio and strong device business. Expanding the Respiratory Care business with cutting-edge technologies and the momentum in the SaaS (Software as a Service) business are also highly encouraging.

San Diego, CA-based ResMed holds a major position as a designer, manufacturer and distributor in the worldwide market for generators, masks and related accessories for the treatment of sleep-disordered breathing (SDB) and other respiratory disorders. The company’s software solutions are geared toward the fragmented and underserved OOH (out-of-hospital) care market, where it sees significant opportunities for innovation. Acquisitions are also a key part of ResMed’s ongoing success.

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Factors Favoring RMD’s Growth

The rally in the share price can be linked to the strong demand for the company’s market-leading mask portfolio, benefiting from a competitor’s recall as well as ongoing product development. ResMed has successfully introduced a full suite of masks in its AirFit, AirTouch and other ranges while offering advanced and expanded integrations of its therapy-based software solutions, such as AirView, to promote greater patient adherence. AirFit F40 is performing extremely well in the U.S. market. In the second quarter of fiscal 2025, the company launched its breakthrough CPAP (continuous positive airway pressure) mask innovation, AirTouch N30i, in select markets.

Masks and other businesses revenues increased 11% year over year globally, including 12% growth in the United States, Canada and Latin America. The ongoing rollout of ResMed’s Brightree ReSupply and Snap technologyhas supported ResMed’s U.S. market growth, with Snap set to become compatible with all HME (Home Medical Equipment) management platforms in 2025. Meanwhile, Device sales remain robust, driven by the combined availability of both AirSense 10 and AirSense 11 sleep devices. ResMed is gearing up to roll out AirSense 11 in more countries throughout 2025 after launching it in India this January.

In Respiratory Care, the company is investing in newer-to-market technologies such as home-based, high-flow therapy (HFT) for treating chronic obstructive pulmonary disease (COPD). By actively generating clinical evidence and economic outcomes, ResMed aims to support the broader adoption of these technology innovations for treating lung disease at home. Furthermore, ResMed is advancing multiple digital health technology initiatives, investing in AI-driven capabilities and customer-facing AI products within its ecosystem.

Investors are also upbeat about the company’s tendency for strategic buyouts to boost its SaaS revenues, with MEDIFOX DAN driving 8% year-over-year growth in the fiscal second quarter. ResMed expects to have sustainable organic growth across its portfolio of SaaS solutions in HME, home health, home nursing and beyond.

Concerns for RMD

The company’s businesses can be affected by the ongoing macroeconomic volatilities, including headwinds arising from the Middle East conflict and adverse currency fluctuations. Also, sustained inflationary pressures could lead to higher operating expenses, weighing on ResMed’s profitability.

A Glance at RMD’s Estimates

The Zacks Consensus Estimate for ResMed’s fiscal 2025 and 2026 earnings per share (EPS) is expected to increase 22.7% and 9.4%, respectively, to $9.47 and $10.36. In the past 30 days, the Zacks Consensus Estimate for the company's fiscal 2025 EPS has increased by 4 cents.

Revenues for fiscal 2025 are projected to grow 9% to $5.11 billion, followed by a 7.3% increase to $5.48 billion in fiscal 2026.

Other Key Picks

Some other top-ranked stocks in the broader medical space are Masimo MASI, Boston Scientific BSX and Cardinal Health CAH.

Masimo has an earnings yield of 2.5%, well ahead of the industry’s -3.6% yield. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 14.4%. Its shares have surged 48.8% against the industry’s 1.3% decline in the past year.

MASI sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Boston Scientific, carrying a Zacks Rank #2, has an earnings yield of 2.7% compared with the industry’s 1.4%. Shares of the company have rallied 53.9% compared with the industry’s 11.8% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 8.3%.

Cardinal Health, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 10.7% compared with the industry’s 9.4%. Shares of the company have rallied 14.9% against the industry’s 2.4% fall. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 9.6%.

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This article originally published on Zacks Investment Research (zacks.com).

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