Is RMD an uncertainty opportunity?

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Question asked 16/09/2023

Is RMD an uncertainty opportunity?

James & Team, Enjoy the daily views & updates as ever. With currently no healthcare exposure, and despite the uncertainty related to the costly & wonder weight loss medication, would you rate the sell off & decline in RMD as a buying opportunity for the longer term with more upside from a risk/reward perspective? I am not a current holder, but have been considering an entry point based upon current multiples which would add some diversification to my holdings. Thanks, Bernie

Answer

Hi Bernie,

Without wanting to sound flippant, I hope so as we hold a 5% weighting in our Flagship Growth portfolio. The majority of the Healthcare Sector has endured a tough 2023 being down -5.2% compared to the ASX200 which is up +3.5% but RMD is one of the worst declining over -25%.

RMD has fallen sharply after delivering a poor, but not awful, result in August but the most damage has been inflicted by the markets belief that Ozempic & Co will cure obesity, significantly reducing the demand for RMD’s products in the process. The issue is this uncertainty might remain well into 2024/5 with our concern being around a possible change in funding, if for instance weight loss treatments get subsidised further, that would likely be a big issue for ResMed, even if the stock looks cheap today.

We are deliberating on our existing position but we are not considering increasing our exposure.

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ResMed Inc (RMD)

LAST UPDATED 15/09/2023 12:08

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