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RMD reporting on 31 July (US time)
This is a report from ** Street on 25 May:

Key Takeaways

• Strategic investments and product rollouts are expected to boost market share and revenue growth, highlighting a focus on innovation and increased production capacity.
• Exemption from U.S. tariffs and a robust pipeline of margin improvement initiatives are aimed at preserving profitability and supporting gross margin expansion.
• Global trade risks, currency volatility, and competition alongside high R&D investments pose challenges to ResMed's margins and market share expansion.

Catalysts

About ResMedDevelops, manufactures, distributes, and markets medical devices and cloud-based software applications for the healthcare markets.What are the underlying business or industry changes driving this perspective?

• ResMed's strategic investments in expanding their manufacturing footprint, especially the upcoming state-of-the-art facility in Calabasas, are expected to enhance manufacturing capacity and efficiency, potentially leading to revenue growth through increased production capabilities.
• The full commercial rollout of the NightOwl home sleep apnea test and the enhancements to the AirSense platform indicate a commitment to innovation in diagnostics and treatment, which could drive revenue growth by capturing a larger market share in the sleep health market.
• The exemption from U.S. tariffs on ResMed’s products aligns with an expectation of stable net margins, as it removes a potential increase in costs associated with import tariffs, thereby preserving profitability.
• ResMed’s robust pipeline of margin improvement initiatives, including manufacturing and logistics efficiencies, and an optimized sea to airfreight ratio, is projected to support gross margin expansion in the near term.
• The accelerated share buyback program, increasing to $100 million per quarter, suggests confidence in cash flow and earnings, potentially enhancing earnings per share (EPS) by reducing the share count.

ResMed Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming ResMed's revenue will grow by 7.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 26.2% today to 28.6% in 3 years time.
• Analysts expect earnings to reach $1.8 billion (and earnings per share of $11.94) by about May 2028, up from $1.3 billion today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 26.2x on those 2028 earnings, down from 27.0x today. This future PE is lower than the current PE for the AU Medical Equipment industry at 30.3x.
• Analysts expect the number of shares outstanding to decline by 0.19% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.97%, as per the Simply Wall St company report.