On Nov 26, 2015, we issued an updated research report on California-based medical equipment manufacturer – ResMed Inc. RMD. The company is a pioneer developer of generators, masks, and related accessories for the treatment of sleep-disordered breathing (SDB) and other respiratory disorders.
ResMed reported a mixed first-quarter fiscal 2016 with revenues beating the Zacks Consensus Estimate and earnings missing the mark. Unfavorable foreign currency translation remains a deterrent over the past few quarters.
With the global SDB market currently growing in mid-single-digits, ResMed is leaving no stone unturned to expand its foothold in this market. With this aim in view, during the quarter, ResMed acquired its Chinese competitor – Curative Medical – a leading provider of non-invasive ventilation and SDB medical devices and accessories.
We believe this deal will allow ResMed to expand its business not only in China, but in a majority of the Asia-Pacific region – which is presently deemed as the third largest SDB devices market in the world.
Further, in recent times, the company has increased its focus for solid business expansion in the international market. Currently, ResMed continues to invest in high growth markets like China, India, Brazil and Eastern Europe. Interestingly, in each of these regions, ResMed is implementing long-term strategies to improve patient outcomes and reduce overall system healthcare costs within each individual country.
On the flip side, the revelation of the failure of the SERVE-HF trial to meet its endpoint in May 2015, indicating a letdown on the part of ResMed’s Adaptive Servo-Ventilation (ASV) therapy device, weighed heavily on the stock. This trial results also resulted in lower ASV sales for the company during the reported quarter, particularly in the European market. Moreover, reimbursement issues and competitive bidding continue to affect the stock.
Currently, ResMed carries a Zacks Rank #3 (Hold).
Key Picks in the Sector
Some better-ranked medical products stocks are Hill-Rom Holdings, Inc. HRC, ICU Medical, Inc. ICUI and Nxstage Medical, Inc. NXTM. All the three stocks hold a Zacks Rank #1 (Strong Buy).
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