ResMed Earnings: Strong Device Sales and Cost Control Boost Earnings

We maintain our USD 258 fair value estimate for narrow-moat ResMed, or AUD 39 per CDI at current exchange rates, following second-quarter fiscal 2024 results. Despite significant market pessimism given the growing prevalence of GLP-1 drugs for weight loss, underlying EBIT grew 15% to USD 366 million sequentially on first-quarter fiscal 2024, with sales up 5% and the underlying EBIT margin expanding roughly 250 basis points to 31%. Our long-term estimates are broadly unchanged, but we increase our fiscal 2024 underlying EBIT forecast by 2% to USD 1.4 billion. This was largely due to expenses tracking slightly below our expectations, as well as strong performances in ResMed’s software-as-a-service business and device sales outside the Americas, up 16% in constant currency on the previous corresponding period.