RMD 0.54% $37.28 resmed inc

Where does this end?, page-9

  1. 7,936 Posts.
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    "The big boys at Deutch Bank believe its worth $59/share"

    Beware the rookie error, Chanz.

    Without having checked, I am almost certain you'll find the "$59" figure refers to the US-listed ADR stock (i.e., US$59/share) which has a 10:1 conversion ratio to the ASX-listed security.

    So, effectively, he's saying that here in Australia its worth US$59 divided by 10, which equals US$5.90.
    Applying the current exchange rate of 0.77 means, in A$ terms, US$5.90 divided by 0.765, which equals A$7.70.

    The reason analysts derive and quote valuation for Resmed in US dollar terms is because the company uses the US dollar as its functional currency, and it reports its accounts in US dollars, which therefore provides the basis for analyst valuations. These, in turn, get converted into A$ terms at whatever the prevailing exchange rate is.

    The distinction, I'm sure you'll agree, is a very important one.
    Last edited by madamswer: 17/03/15
 
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