UPDATE: Deutsche Bank Reiterates Hold Rating, Raises PT on ResMed Following Competitive Bidding Funding Cuts

In a report published Thursday, Deutsche Bank analyst David Low reiterated a Hold rating on ResMed (NYSE: RMD), and raised the price target from $45.00 to $46.00.In the report, Deutsche Bank noted, “While industry feedback on the impact of the large Competitive Bidding funding cuts remains mixed, we believe ResMed's US sales will come under pressure in FY14 given its position as the premium priced provider to the sector. However, our concerns over the potential impact on earnings have largely been put to rest by the 10% fall in the A$ since the start of May. Hold rating retained given the limited upside potential to our revised target price. With Round 2 of Competitive Bidding coming into effect next week we have reviewed the impact on ResMed. Using CMS's ~$850m of CPAP funding in 2011 and its assessment of $19m savings from Round 1, we calculate Round 2 will reduce CMS funding by $175m or ~18%. Allowing for private funds follow-on cuts we estimate total funding will drop by $225m or ~6%.”ResMed closed on Wednesday at $47.12.