ResMed Shares Close Higher, As RMD Added To Bullish Watch List

ResMed shares (ASX: RMD) have continued to fight back towards A$30 in recent sessions, adding 3.2% on Thursday to close at A$29.32. It has been a difficult start to 2026 for RMD bulls, who have seen the share price fall back 18.94%, despite a 12.68% jump over the past month.

In what could be a further boost to ResMed holders, Goldman Sachs added the shares to its prestigious APAC Conviction List, signalling renewed confidence in the company’s long-term growth trajectory despite broader sector headwinds.

The addition to the APAC Conviction List came during Goldman’s monthly portfolio refresh, and received a rating reserved for the firm’s highest-conviction investment ideas across the Asia-Pacific region, as per the name. Goldman maintains a Buy rating on ResMed shares, with a price target of A$46.70, implying potential upside of approximately 59% from current levels.

Why Add ResMed?

Goldman Sachs’ decision centres on expectations for sustained patient growth in continuous positive airway pressure therapy, the core treatment modality for obstructive sleep apnea that accounts for the bulk of ResMed’s revenue. The firm’s analysts highlighted structural tailwinds including aging demographics, rising obesity rates, and persistent underdiagnosis of sleep disorders across developed and emerging markets.

The A$46.70 price target aligns with broader sell-side consensus, which has coalesced around similar levels despite recent target reductions. ResMed currently trades at a forward price-to-earnings ratio of approximately 16.9 times, representing a meaningful discount to both global medtech peers at roughly 19 times and ASX healthcare stocks averaging 22.8 times earnings.

ResMed’s most recent quarterly results support the growth narrative. The company reported fiscal 2026 third-quarter revenue of US$1.4 billion, up 11% year-over-year and 8% in constant currency terms. More importantly, gross margins expanded by 290 basis points to 62.2% on a GAAP basis, demonstrating the company’s ability to drive profitability even as it invests in product development and geographic expansion. Operating income rose 17% during the period, outpacing revenue growth and validating the margin expansion story that bulls have emphasised.

The Broader Street View

While Goldman’s upgrade provides a high-profile endorsement, the broader analyst community has adopted a more cautious stance in recent months. Several major Wall Street firms have trimmed price targets on ResMed’s U.S listed shares, though most maintain positive ratings. ResMed’s share price on the NYSE sits at $201.10 for reference.

Citi reduced its target from US$340 to US$270 while keeping a Buy rating, noting that fundamentals remain intact despite valuation compression. KeyBanc cut its target from US$290 to US$266 but retained an Overweight rating, citing lower peer multiples following industry conferences. Evercore ISI lowered its target from US$300 to US$255 while staying at Outperform.

The most notable departure came from Morgan Stanley, which downgraded ResMed from Overweight to Equal Weight with a reduced price target of US$230, down from US$286. The firm cited more balanced risk-reward dynamics after strong prior performance and lingering uncertainty around the long-term impact of GLP-1 obesity medications on sleep apnea prevalence.

Despite these adjustments, consensus among 15 to 19 analysts covering the stock remains constructive, with an average 12-month price target around US$260 to US$271, representing approximately 30% upside from recent trading levels. The predominance of Buy and Overweight ratings suggests that while enthusiasm has moderated, the investment case remains broadly intact.

The GLP-1 Question

The elephant in the room for ResMed investors remains the potential impact of GLP-1 obesity drugs such as Ozempic and Wegovy. Bears argue that widespread adoption of these medications could reduce the addressable market for sleep apnea treatment by helping patients lose weight, a key risk factor for the condition. This concern has featured prominently in broker research and contributed to target reductions and the Morgan Stanley downgrade.

Bulls counter that sleep apnea remains significantly underdiagnosed globally, with penetration rates still low even in developed markets. They argue that any potential headwind from obesity drugs will be more than offset by improved diagnosis rates, aging populations, and geographic expansion, particularly in Asia and Latin America. Goldman’s emphasis on patient growth suggests the firm sides with this view, at least over its investment time horizon.

Looking Ahead

ResMed’s fiscal 2026 fourth-quarter earnings, scheduled for 6 August 2026, will provide the next major test of the bull thesis. Markets will scrutinise not just headline revenue and earnings figures, but also device volumes, average selling prices, and commentary on competitive dynamics and GLP-1 impacts. Continued margin expansion will be critical to validating the view that ResMed can compound earnings faster than revenues over the medium term.

Goldman Sachs’ Conviction List designation carries meaningful signal value in the Australian market, historically reserved for only a handful of ASX-listed companies at any given time. The firm’s willingness to elevate ResMed at a time when peers are trimming targets suggests genuine conviction in the long-term, even as near-term sentiment remains fragile. Will they be proven right?

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