From the AFR yesterday: Analysts believe ResMed's recent...

From the AFR yesterday:

Analysts believe ResMed's recent acquisition of US-based Inova Labs, a company specialising in oxygen therapy products, will slightly dilute its 2015-2016 earnings, but add to them in the following year as unnecessary costs are stripped out.

ASX-listed medical equipment company ResMed, which is coming up to the release of its half-yearly results on Friday, took a share price battering in 2015 because of the shock failure of a clinical trial. It is trading around $7.70, down more than 21 per cent on its 52-week high of $9.84.

Credit Suisse research analysts Saul Hadassin and David Bailey said in a note that Inova Labs' products for chronic obstructive pulmonary disease would complement ResMed's portfolio.
"While a lower gross margin business to RMD's current base, we note the strong market growth rate for portable oxygen, presumably as the prevalence of COPD rises and people with the disease look to more practical delivery mechanisms for oxygen supplementation," the Credit Suisse analysts wrote.

This market is estimated at $200 million, with a growth rate of 7-8 per cent annually to 2018. COPD is the third leading cause of death in the US.
SALES FORECAST TO RISE

As a sector, healthcare has been one of the better performers of the ASX indices so far in 2016. It also performed better than the S&P/ASX 200 in 2015, but it's volatile.

Goldman Sachs analysts Ian Abbott and Grace Fulton are expecting ResMed to post sales of $US440 million ($58 million) in its first-half results, up 4 per cent on the previous corresponding period. They're also forecasting a net profit after tax of $US93 million, up 2 per cent.

"Product mix and FX have negatively impacted gross margin over the past three quarters. We expect that moderating flow generator sales growth, recovering masks sales and favourable FX and production and freight efficiencies will support recovery in gross margin," the Goldman Sachs analysts said.
ResMed's 12-month price target, according to a survey of analysts on Bloomberg, is $8.46, and 50 per cent of analysts ranked it a buy.

http://www.copyright link/business/resmed-tipped-to-rise-in-2016-20160118-gm80ns