Stock of the day: ResMed
ResMed’s stock fell 3% after a Wolfe Research downgrade, citing potential risks from Eli Lilly's Ozempic drug targeting sleep apnea. Despite strong financials, concerns about future CPAP machine demand persist.
(AI video summary)
This video was created on 19 September for IG audiences by ausbiz.
Stock of the day: ResMed
ASX code: RMD
Suggestion: Hold
Impact of Eli Lilly’s GLP-1 drug
ResMed, a leader in sleep and respiratory device manufacturing, has recently faced notable challenges. ResMed is under pressure following a downgrade by Wolfe Research. The downgrade was due to perceived risks to ResMed’s sleep apnea device business from Eli Lilly’s GLP-1 drug, Ozempic. There are concerns that Ozempic could expand its indications to include obstructive sleep apnea, potentially reducing the demand for ResMed’s CPAP machines.
Market reaction and share performance
ResMed’s share price dropped by 3% in response to these concerns. This volatility isn’t new; the stock has consistently reacted to Eli Lilly's updates regarding Ozempic. Despite ResMed’s strong recent financial performance, an operating profit increase of 38% and healthy cash flows, the market remains cautious.
Investors keeping an eye on ResMed’s stock and the impact of Eli Lilly’s Ozempic on the sleep apnea market might consider exploring IG's advanced trading platforms. It’s essential to conduct thorough research and fully understand the risks involved in share trading before making any investment decisions.
Market sentiment and investment outlook
Analysts predict that Ozempic’s potential sleep apnea indication could lead to a decline in CPAP machine sales. A survey of 50 physicians revealed that half projected lower CPAP machine volumes in the future. It’s important to remember, though, that only 50% of sleep apnea cases are linked to weight; the other 50% are due to genetic factors.
While negative headlines surround ResMed, the company’s fundamentals are strong. Its most recent financial results indicate effective cost management and operational efficiency. For long-term investors, this may present a buying opportunity. However, caution is advised, as the stock could experience further declines. An attractive entry point might be around A$34.00, depending on future market developments.
A demo account can be a helpful resource to practice your trading strategy without risk.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Explore the markets with our free course
Discover the range of markets you can trade CFDs on - and learn how they work - with IG Academy's online course.
Turn knowledge into success
Practice makes perfect. Take what you’ve learned in this shares strategy article, and try it out in your demo account.
Ready to trade shares?
Put the lessons in this article to use in a live account. Upgrading is quick and simple.
- Trade over 13,000 popular global stocks
- Protect your capital with risk management tools
- Deal on 70 key US stocks out-of-hours, so you can react to news
Inspired to trade?
Put the knowledge you’ve gained from this article into practice. Log in to your account now.
Live prices on most popular markets
- Forex
- Shares
- Indices