Preview of ResMed’s Q2 numbers

ResMed is due to release its Q2FY15 on January 23, it will be keenly watched for several reasons:

Source: Bloomberg
  1. FX complexity - AUD/USD will be a benefit, however EUR/USD will headwind
  2. Healthcare multiples - are they justified?
  3. Product momentum and market position

Consensus expectations are for sales to increase 5.6% over the quarter to $407 million.  Operational income is forecasted to be $111 million over the quarter with net profit at $88 million. Solid estimates, yet they would not be considered overly impressive.

Stock specific, current consensus is that mask sales in the US have been muted this quarter. However, the AirCurve generators look to have benefited from its launch mid-way through last year in both the US and European markets and should offset the mask sales issues, as this high-end product attracts a premium.

The sales growth may also be hampered by price cuts introduced in February which are still eating into margins and although no new cuts were introduced over the previous quarter, this cut is still having an impact.

Finally FX, AUD/USD will certainly give ResMed Inc a relief boost to earnings and should boost gross margins, however the EUR will be a major concern to total group revenues and that may negate the tail winds obtained from the AUD. Forecasts for the euro in 2015 are for it to be closer to parity, rather than $1.30 - the price the pair was at this time last year.



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