Shares of ResMed Inc. (RMD), which have faced recent pressure due to concerns surrounding the popularity of obesity drugs and their potential impact on the demand for the company's sleep therapy devices, may be on the brink of a turnaround, as per analysts at Needham.
While GLP-1 drugs, including Novo Nordisk's (NVO) Ozempic and Wegovy, could potentially lead some sleep apnea patients to reduce their usage of CPAP machines, resulting in a milder severity of their condition, the analysts confidently believe that the overall impact will be minimal. In fact, they suggest that ResMed is poised to maintain 5% to 7% revenue growth and achieve double-digit per-share earnings growth in the coming years.
Given their positive outlook, the analysts have upgraded their rating on ResMed shares from hold to buy, also setting a $180 price target for the stock.
Despite year-to-date declines of 26%, ResMed shares have experienced a slight uptick of 1% in premarket trading on Wednesday. This comparison is against the backdrop of the broader market, with the S&P 500 recording a 17% gain during the same period.