ResMed shares (ASX: RMD) added 2.02% yesterday to close at $34.89, before pulling back 0.32% today to S$34.78, a 36.8% recovery off the lows four months ago. Momentum has been clear to see, with the chart below highlighting what has been a dramatic year of reversal.
After a 28% drop through the first five months of the year, the rally from that point has pushes RMD into technically overbought territory at 75.99 (RSI) just over a week before it reports Q1 FY27 earnings on 29 October.
With a confirmed date on the calendar and a strong recent margin story behind it, investors look willing to pay up for exposure ahead of the print rather than wait for the numbers. The latest fundamentals have proved supportive, with ResMed’s latest full-year results delivering revenue growth of around 10% and non-GAAP EPS growth of roughly 17%, with gross and operating margins expanding and return on equity near 25%.
Management has leaned into shareholder returns, flagging more than US$1.85 billion of capital returns for the coming fiscal year and lifting the quarterly dividend by about 10%. In a market still preoccupied with elevated bond yields and the search for resilient earnings, that combination of recurring device and mask revenue, software-embedded economics and rising cash returns fits the defensive growth template that has been attracting renewed interest across the healthcare complex.
The Setup
The average price target at $40.13 implies roughly 14.5% upside from today’s close, suggesting the Street continues to see meaningful medium-term value. On the technical front, the trend structure is bullish, but stretched. The price sits above both the 50-day average at $32.13 and the 200-day at $31.87, with the 20-day EMA above the 50-day, consistent with an established medium-term uptrend.
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Momentum, however, is running hot, as the RSI at 75.99 is firmly in overbought territory, whilst the CCI reading of 120.8 confirms the upside stretch. The latest close above the upper Bollinger band at $34.49, on a band width of around 12% and rising 20-day volatility, points to a range-expansion move rather than a quiet grind.
What happens next hinges on the 29 October report, where guidance, and progress on the AirSense 11 rollout and the Noctrix acquisition will likely matter more than the headline beat or miss.
Bull Case:
- Q1 FY27 earnings on 29 October could extend margin and EPS momentum
- Capital returns above US$1.85 billion and a 10% dividend lift support valuation
- Consensus target of $40.13 implies roughly 14.5% upside from today
Bear Case:
- RSI above 70 and price above upper Bollinger band signal stretched positioning
- Last quarter’s revenue miss triggered a sharp after-hours selloff
- US analysts sit at Hold, with insider selling and competition concerns lingering
