Steady as she goes.., page-53

"Wonder how accurate these comments are or are they just scare tactics?"

ResMed cut to Underperform from Neutral at Macquarie.
Noting SERVE HF, the largest randomised study ever examining survival for PAP therapy, Macquarie said that it believes the study will impact prescribing behaviour more broadly than its direct study population.
“We also see risk that the large upcoming studies examining CPAP outcomes may not deliver the positive results we believe the market has baked-in,” the broker said.


I've followed this particular analyst for several years.

While I've normally got little but contempt for equity analysts, I think he's the best healthcare analyst in town.

Very thorough fundamental analysis and very high conviction... not afraid to go out on a limb and bang the table when he believes he's onto something.

His limitation, as can be seen from this particular call of his which - as proven by the past two excellent results from the company - is not playing out according to his thesis, is that he can sometimes try to be too contrarian simply for the sake of it.

Demand is not a problem for RMD; it's strong and growing. The issue for the company is pricing pressure on the commoditised part of RMD's business, namely masks. Which means we are seeing very strong, double-digit top-line growth, driven by the new AirSense range of flow generators, but discounting of masks means the bottom line is flat-lining.

I suspect that will be the case for a while yet.

And with the stock trading at a P/E multiple above 22x (and even with US$660m of net cash the EV/EBITDA is still a pretty lofty 14.5x), I don't see too much short-term upside for the share price.