Leader In The 'Growing' Sleep-Disordered Breathing Market Might Be Worth An Investment

In a report published Thursday, Barclays analyst Matthew Taylor initiated coverage of ResMed Inc. (NYSE: RMD) with an Equal-Weight rating and $61 price target. The company holds a leadership positing in the growing market for sleep disordered breathing (SBD), manufacturing devices, such as Continuous Positive Airway Pressure, for treating the disorder."We expect RMD to continue to grow its top line in the mid/high-single digits, driven by new Flow Generator product launches and future Mask line updates and drive leverage and slightly faster EBIT growth," Taylor stated.Not only does the company have a track record of returning cash to shareholders, it also has an "attractive" core market, with opportunities for growth in new associated areas. According to the analyst, ResMed is seeing a strong cycle, with the launch of market leading platforms, such as Air Solutions and Flow Generators.However, this also leads to tough comps, with challenges to growth in the company's Masks segment. "In addition, we see potential for risk from low cost competition and price, along with reimbursement headwinds," the Barclays report said.The stock offers balanced risk/reward at present. "The SDB market is large, underpenetrated and demographic trends should support continued growth. RMD operates in an oligopoly and is launching technologies to improve patient experience and outcomes, drive compliance, and increase connectivity that should help cement its market leading position," Taylor added.In addition, the analyst believes that there is potential for ResMed to expand into emerging markets, as well as new areas of respiratory treatment, such as Chronic Obstructive Pulmonary Disease.