UPDATE: Deutsche Bank Downgraded ResMed on Disappointing Sales Forecast
In a report published Friday, Deutsche Bank Markets Research analyst David Low downgraded ResMed Inc. (NYSE: RMD) from Buy to Hold and maintained their $54 PT based on a disappointing sales forecast.
Although the medium term outlook remains positive, ResMed suffered market share pressure from Competitive Bidding Round 2 (CB2). Low commented, “The disruption and price pressure were offset by a number of positive trends: (1) a mix shift from lower margin devices CPAP to higher margin devices APAP, (2) market share gains in Bi-levels, and (3) growth in the sales of its new ventilation range.”
The reported revenue of approximately $358M was below Deutsche Bank and consensus forecasts. The adjusted EPS of $0.56 also missed estimates of $0.58 consensus and was 3 percent lower than the analyst. ResMed'd ROW sales grew only 5 percent, partially blamed on Japan's soft sales. US device sales also slowed approximately 4.5 percent, with mask sales growth dropping to 3 percent. ResMed's management previously estimated mask sales to grow 8-10%. Deutsche Bank noted that they expect mask sales growth to increase with new mask launches.
ResMed closed at $56.31 on Thursday and is currently trading -12.89 percent.
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