ResMed Shares Downgraded: Trimmed Price Target Offers Some Comfort To Bulls
ResMed (ASX:RMD) fell about 2% in early NYSE trading after Morgan Stanley downgraded the stock from Overweight to Equal Weight and cut its price target to $230 from $286, citing cooling growth as competition from Philips returns to the U.S. in 2027. Morgan Stanley expects lower revenue growth; ResMed reported Q3 FY2026 adjusted EPS of ~$2.86 (+21% YoY).
Downgrade and lower target shift the near-term narrative from Philips-recall tailwind to normalized competition, pressuring valuation multiples.
Morgan Stanley downgraded ResMed to Equal Weight and cut its price target to $230 from $286, citing cooling growth as Philips returns in 2027.
Bias to near-term underperformance versus prior expectations; upside depends on whether 2027 competitive re-entry is less disruptive than modeled.
Background
ResMed’s recent outperformance is attributed to Philips’ CPAP recall sidelining it from the US market, boosting ResMed’s growth and pricing power.
Why it matters
The downgrade reframes the investment case toward a more conservative near-term earnings outlook as Philips is assumed to re-enter US distribution in 2027; GLP-1 demand concerns are described as moderating but still a long-tail valuation risk.
Market relevance
A broker rating/target cut tied to a concrete competitive timeline is likely to drive near-term positioning and multiple compression for ResMed.
Market effects
Read-across for sleep apnea/CPAP device peers: expectations may shift from competitor absence to competitive normalization timelines.
Potential sentiment spillover to ASX-listed medtech exposure given the article links ASX and NYSE reactions.
Highlights how regulatory/recall-driven market share shifts can reverse, affecting valuation frameworks across medical device categories.
Alternative perspectives
Bulls argue structural OSA prevalence (ageing, obesity) and ResMed’s installed base/recurring consumables can offset competitive normalization, keeping medium-term upside intact.
The article doesn’t quantify Philips’ actual ramp speed, regulatory clearance timing, or how much pricing power ResMed retains via software/data and recurring mask demand—key swing variables for 2027.
Key entities
- companyResMed
Subject of the downgrade; growth tailwinds expected to moderate with renewed competition and valuation multiple risk.
- analyst_firmMorgan Stanley
Issued the rating change (Overweight to Equal Weight) and trimmed the price target to $230 from $286.
- companyPhilips
Expected to re-enter the US sleep device market in 2027 after recall-related absence, cited as the main near-term headwind.
