Nassarius Capital
Long/short equity

ResMed: CMS Takes Rungs Out Of Ladder

ResMed's (NYSE:RMD) streak of 72 quarters of y/y revenue growth is in jeopardy. Beginning July 1st, CMS cuts of 47% for CPAP-related equipment should diminish ResMed's first mover pricing advantage and end its revenue growth trend. We believe these future industry headwinds will outweigh growth opportunities and result in ResMed's inflated valuation compressing to comparable levels. Our twelve-month price target of $37 for RMD is based on a forward P/E of 17x.

Company and Industry Overview

ResMed is a pure-play in the growing sleep-disordered breathing space with a market cap of $6.3 billion. It's a leading supplier of continuous positive air pressure (CPAP) devices and masks/accessories that treat obstructive and central sleep apnea. The business model is designed

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