ResMed Inc. (NYSE:RMD) is well positioned to benefit from the long-term growth of the global obstructive sleep apnea (OSA) treatment market. Likewise, the company remains well positioned to benefit from growing awareness and penetration in the global market, backed by a robust product portfolio.
The company’s OSA portfolio includes CPAP and APAP machines, led by the AirSense platform. The AirSense 10 series is one of the most widely used CPAP and APAP machine series. Beyond sleep therapy machines, it also offers nasal, nasal-pillow, and full-face masks, along with a wide range of accessories and related products.
The broad product portfolio offers multiple avenues for generating recurring revenue beyond the initial sale of a sleep therapy device.
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In the fourth quarter of fiscal 2026, ResMed’s revenue increased 9% year over year to $1.5 billion, supported by strong demand for sleep devices, masks, and accessories. Americas device revenue increased 6%, while total Americas Sleep and Breathing Health revenue rose 8%. Americas masks and other revenue increased 10%. The stronger performance is particularly important as it highlights the ability to monetize the installed patient base beyond the initial device purchase.
RBC Sees Further Earnings Growth
Amid the strong OSA demand and growth, RBC Capital expects the company to achieve high single-digit earnings per share growth over the next three years. While the company could come under pressure if Philips Respironics returns to the US market, RBC assumes a return in fiscal 2028.
Similarly, on September 15, the research firm upgraded ResMed Inc. stock to an Outperform from Sector Perform. It also raised the price target to $262 from $244, expecting it to continue generating significant value behind market leadership in obstructive sleep apnea devices.
Competitive and Guidance Risks Remain
Nevertheless, ResMed is not immune to risks amid its strong position in sleep apnea treatment. Soaring competition is the biggest threat that could rattle the company’s growth metrics. For a long time, Philips Respironics has been absent from the US market. Its return to the market could give physicians and patients a major alternative, thereby piling pressure on sales.
Additionally, the stock has come under pressure after issuing a 2027 forecast that fell short of Wall Street expectations. It expects revenue to range between $5.75 billion and $5.85 billion, below analysts’ expectations of $5.92 billion. The disappointing guidance comes as the company stares at cost and competitive pressures that limit growth.
Another near-term headwind is the suspension of Astral ventilator sales following a device correction that the FDA classified as a Class I recall. The disruption could weigh on revenue while ResMed addresses the issue and works toward resuming sales.
Hedge Fund Positioning
Hedge fund interest in ResMed remained relatively stable in the second quarter. The number of hedge funds holding positions in RMD stock stood at 45, unchanged from the first quarter.
Some major investors increased their exposure during the quarter. Arrowstreet Capital raised its stake by 151% to approximately $220.16 million, while AQR Capital Management increased its position by 161% to approximately $177.14 million.
At the same time, bearish positioning remains significant. As of August 31, approximately 13.07 million ResMed shares were sold short, representing short interest of 9.06% of shares outstanding.
The Verdict
ResMed Inc. enters the next phase of growth supported by a leading position in sleep apnea treatment. The company’s ability to generate revenue beyond the initial device sale also provides an important source of recurring demand. . The key question for investors is whether the company’s market leadership and expanding product ecosystem can continue to offset intensifying competitive and operational pressures.
Investors should also balance underlying strengths against the return of Philips Respironics to the U.S. market, weaker-than-expected fiscal 2027 revenue guidance, and the temporary Astral ventilator sales suspension. These factors could limit near-term growth even as the underlying OSA market continues to expand.
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