Why is ResMed (RMD) still in decline?
Hi MM team, I recently bought Resmed (RMD) but it seems to keep declining further. Any thoughts on why it continues to fall?
The Latest Q&A
Answer
Hi Steve,
ResMed (RMD) has struggled over the last 3 weeks for 2 main reasons although a generally weak market hasn’t helped:
- At the start of August RMD delivered a disappointing earnings result with 4Q revenue coming in below consensus which was also accompanied by weaker margins, not ideal when the market was looking/positioned for expansion.
- Traders are getting excited that Ozempic will cure the increasing global trend toward obesity. Less overweight people means less cases of sleep apnoea and reduced demand for RMD’s products.
We are far from convinced that Ozempic will solve the global obesity trend, its expensive ($140pm) and once halted, weight very often returns but for now its weighing on RMD’s share price. UBS recently published a very comprehensive note on this topic, and following a lot of on the ground research concludes that the market is extrapolating far too much impact on RMD based on current finding of weight loss treatments, i.e. RMD is oversold, but that could change if these treatments attract more subsidies.
We think RMD is looking for a low.
