for thoses interested, page-7

I bought rmd today due to maqauarie recommendation
Trading Pick of the Day
14 June 2007

RMD: Emerging from the Perfect Storm

Adverse events in recent months have in some ways, according to Macquarie Research Equities (MRE), placed Resmed (RMD) in the middle of a ‘perfect storm’, from which it is now beginning to
emerge.

Period of strong comparables almost over. In the last quarter, while RMD was clearly suffering a comparable sales growth hurdle of its own making, the quarter was also vulnerable on account of its lack of a new US products driver. It was at this time that RESP decided to capture share in a market in which it had no previous presence, seeding the market with its new Optilife nasal product to address RMD’s dominance of this market segment.
Margins relatively secure in the short to medium term as discounting by RESP on its Optilife mask should abate now that it has gained market share. Furthermore, the increasing sales of the high margin Adapt SV and the likelihood that competitive bidding effects will not be material (in the short to medium term) are supportive factors.
Broad market growth drivers are intact. MRE expect market growth to continue being driven by factors including new product launches (particularly for RMD); increased recognition of morbidity associated with OSA; and a reduction in the sleep diagnosis bottleneck.
Fresh direction in Europe. The RMD European business has been in need of a fresh direction, with its clinical product leadership failing to be converted into market share stability, let alone gains. The appointment of the head of the successful Nordic operations, Lasse Beijer, as the new COO of Europe is a positive step in MRE’s view.

RMD will still be cycling tough US industry growth (that RMD itself created through its market-growing product launches) for the June quarter result, expected to be reported in early August.

Following the perfect storm of negative drivers for RMD, the stock is at a low point in its sales (and earnings) growth cycle, and is at historical lows in terms of forward multiples. Given these value dynamics and the potential technical pressure from index issues, MRE believe medium- to long-term investors should use the current liquidity to acquire an overweight RMD position. Outperform recommendation retained with a twelve-month price target of $5.82.

Investors and traders looking for short to medium-term leveraged exposure to the RMD share price should consider Macquarie Instalments for a higher risk, higher return alternative to direct share investment.