RBC lifts ResMed target to $262 on $1.5 billion Q4 revenue

ResMed Inc., the leading provider of sleep apnea treatments, reported that its fourth-quarter fiscal 2026 revenue rose by nine percent year over year to reach $1.5 billion. This financial performance was driven by robust consumer and clinical demand for its core sleep devices, masks, and essential accessories. The company’s flagship AirSense 10 series remains a dominant force in the global obstructive sleep apnea market, supporting the overall strength of its product portfolio. In the Americas region, which constitutes a significant portion of ResMed’s business, total Sleep and Breathing Health revenue climbed by eight percent. Within this segment, device revenue increased by six percent, while revenue from masks and other recurring items grew by ten percent. This specific growth in non-device categories highlights the company’s successful strategy of monetizing its existing installed base of patients, ensuring steady cash flow beyond the initial purchase of a therapy machine.

The underlying drivers of this growth stem from increasing global awareness and higher penetration rates for obstructive sleep apnea treatments. ResMed benefits from a broad ecosystem that includes continuous positive airway pressure and automatic positive airway pressure machines, alongside a wide variety of nasal, nasal-pillow, and full-face masks. This diversified offering creates multiple opportunities for recurring revenue, which stabilizes the company’s financial outlook even in volatile market conditions. Analysts at RBC Capital view this long-term growth trajectory favorably, projecting high single-digit earnings per share growth for ResMed over the next three years. The firm recently upgraded ResMed stock to an Outperform rating, raising its price target from $244 to $262. This bullish stance reflects confidence that ResMed will continue to generate significant value through its established market leadership in the critical field of sleep and breathing health devices.

However, the company faces mounting competitive pressures that could challenge its market dominance in the coming years. The most significant threat is the anticipated return of Philips Respironics to the United States market, which RBC Capital expects to occur in fiscal 2028. For years, Philips has been absent from the U.S. market, allowing ResMed to consolidate its position without direct competition from a major rival. A return by Philips would provide physicians and patients with a substantial alternative, potentially exerting downward pressure on ResMed’s sales and pricing power. Furthermore, ResMed recently issued a fiscal 2027 revenue forecast ranging from $5.75 billion to $5.85 billion, which fell short of Wall Street’s consensus estimate of $5.92 billion. This disappointing guidance has already weighed on the stock price, signaling that rising costs and competitive dynamics are beginning to limit the pace of growth.

In addition to competitive threats, ResMed is navigating a specific operational risk involving its Astral ventilator. The company has suspended sales of this device following a device correction that the U.S. Food and Drug Administration classified as a Class I recall. This is the most serious type of recall, indicating a reasonable probability that the use of the device will cause serious adverse health consequences or death. The suspension disrupts revenue streams while ResMed works to resolve the safety issue and resume commercial sales. Despite these headwinds, hedge fund interest in ResMed has remained stable, with forty-five funds holding positions in the second quarter, unchanged from the previous period. As the company navigates this complex landscape, investors are watching closely to see how ResMed balances its strong market position against the tangible risks of increased competition and regulatory challenges.