A small revenue miss has created a buying opportunity in this $9 billion healthcare company.
ResMed (RMD)
from Weiss Million Dollar Ratings
ResMed (RMD, Rated A+, 813 shares) stock fell hard today in the wake of the company’s earnings report. Although revenue grew 6% from the year-earlier quarter, to reach $422.5 million, analysts had been expecting something a little higher ($424 million). Gross margin fell 380 basis points from last year, mainly due to European exposure, and this has spooked investors because of the firm’s strategy of looking to Europe as a growth avenue.
RMD manufactures breathing equipment, and it is well on its way to becoming the absolute standard in that business. Vagaries of the health-care laws in the U.S. will continue to make the stock somewhat volatile, but it’s a big gainer for us despite today’s pullback.
I still think the stock can achieve my 12-Month Price Target of $80, perhaps before long. I consider today’s pullback as temporary.
Don Lucek, Weiss Million Dollar Ratings Portfolio, published by Money and Markets, a Division of Weiss Research, Inc., www.moneyandmarkets.com/services/trading-services/weiss-million-dollar-ratings-portfolio, issues@e.moneyandmarkets.com; 1-800-291-8545, April 24, 2015