Bullish stock to watch: ResMed Inc. (NYSE: RMD)

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ResMed Inc. (NYSE: RMD) stock generated over 53% in the last one year (As of May 11th, 2020; Source: yahoo finance) and is nearing to its 52-week high level. The company’s decent results for the third quarter of FY 20 coupled with positive sentiment on Pharma sector by investors could be the drivers.

The company has reported fiscal third-quarter net income of $163.1 million, compared to $105.4 million in the year-ago period. The company has produced more than 52,000 noninvasive ventilators, including bilevels and invasive ventilators during the quarter, which represents is a threefold increase on the production from the same quarter in 2019. The company has produced more than tenfold increase in the ventilation mask. Throughout the third quarter, despite all the changes brought by this coronavirus, the company has continued to execute on the long-term ResMed 2025 strategy, including digital health, expanding end-to-end pathways for sleep apnea, for COPD and for asthma as well as building the world’s best out-of-hospital healthcare software network.

RMD in the third quarter of FY 20 has reported the adjusted earnings per share of $1.29, beating the analysts’ estimates for the adjusted earnings per share of $1.03, according to analysts surveyed by FactSet. The company had reported the adjusted revenue growth of 17 percent to $769.5 billion in the third quarter of FY 20, beating the analysts’ estimates for revenue of $724.1 million. The revenue growth is on back of growth and positive momentum across the product portfolio, software solutions and global markets. Software-as-a-service revenue for the third quarter grew 12% to $90 million over the prior year quarter. The non-GAAP gross margin expanded by 70 basis points to 60% in the March quarter compared to 59.3% in the same quarter last year.

Moreover, excluding revenue from the software-as-a-service business, the sales in U.S., Canada and Latin America countries were $394 million, which reflects an increase of 12% over the prior year quarter. The sales in Europe, Asia and other markets were of total $286 million, which reflects an increase of 23% over the prior year quarter or, in constant currency terms, a 27% increase. By product segment, U.S., Canada and Latin America device sales were $196 million, which reflects an increase of 8% over the prior year quarter. Masks and other sales were $197 million, which reflects an increase of 17% over the prior year quarter. In Europe, Asia and other markets, device sales were of total $195 million, which reflects an increase of 26% over the prior year quarter or, in constant currency terms, a 29% increase.

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