ResMed Earnings Preview – Stock Flat Leading In

ResMed’s stock (NYSE:RMD) has underperformed in a relative sense over the past 12 months, adding just 0.94% on the period, whilst the broader S&P 500 has added 14.7%. The company reports earnings after the closing bell, with bulls looking for signs of a catalyst.

The quarter provides the first read on whether device and mask momentum can sustain the margin expansion trajectory established in fiscal 2025, while consensus sits at $2.72 EPS and $1.40B revenue. Both figures represent double-digit year-over-year growth, but the setup carries asymmetric risk after the company’s October quarter delivered a beat that the market sold off 2.8% in extended trading on restructuring and expense concerns.

The quarter’s outcome will determine whether ResMed’s 26.4x P/E multiple, a premium to the medical device sector average, can be sustained through fiscal 2026. Management reiterated a 19-20% operating expense ratio framework in October, creating a clear benchmark for profitability discipline. The company’s 27.35% profit margin and 25.41% ROE both rank well above industry norms, but the October quarter’s $16M restructuring charge and acquisition-related costs introduced uncertainty about whether incremental expenses will re-accelerate.

The market’s willingness to sell a beat in October establishes a higher bar for this print. A result that merely clears consensus without demonstrating margin durability or providing confidence on the expense trajectory will likely face scrutiny. Conversely, evidence that gross margin gains from operational efficiencies remain intact, combined with stable or improving device volumes across geographies, would support the stock’s 13.6% implied upside to the $292.67 consensus price target.

[auto_nav]

Consensus Estimates

The consensus EPS estimate of $2.72 sits 12.1% above the prior-year quarter’s $2.43 result, reflecting expectations for continued profitability expansion. Revenue consensus at $1.40B implies 9.0% year-over-year growth, a modest deceleration from the 9.8% pace posted in fiscal Q1 2026. The estimate range is relatively tight, with EPS spanning $2.63 to $2.87 and revenue from $1.36B to $1.43B, suggesting limited disagreement among analysts.

Management Guidance and Commentary

ResMed does not issue formal quarterly revenue or EPS guidance, a departure from many medical device peers. Instead, management provides operating expense ratio targets and qualitative commentary on demand drivers. In the fiscal Q1 2026 earnings call, the company reiterated expectations for full-year fiscal 2026 operating expenses to remain within a 19-20% range as a percentage of revenue.

“We continue to see strong demand for our devices and masks globally, with particular momentum in our resupply business and new patient setups. Our focus remains on operational efficiency and margin expansion as we integrate recent acquisitions and invest in digital health capabilities.”

Management’s October commentary emphasized device and mask demand strength, framing the quarter’s expense increase as temporary rather than structural. The 19-20% operating expense ratio guidance implies that revenue growth should translate directly to operating leverage, assuming gross margins hold or expand.

Analyst Price Targets & Ratings

Wall Street maintains a bullish stance on ResMed, with 80% of analysts rating shares a Buy or Strong Buy. The consensus target of $292.67 implies 13.6% upside from current levels, though the lack of Sell ratings suggests limited bearish conviction even among cautious analysts.

Sector & Peer Comparison

ResMed’s 27.35% profit margin ranks at the top of its peer group, exceeding Medtronic’s 14.2%, Stryker’s 16.4%, and Boston Scientific’s 12.1% by substantial margins. This profitability advantage reflects the company’s focus on high-margin sleep and respiratory care devices, combined with a recurring revenue model driven by mask and accessory resupply.

Earnings Track Record

ResMed has delivered earnings beats in 14 of the past 20 quarters, a 70% success rate that establishes credibility with the Street. The company has posted four consecutive beats since December 2024, with surprise percentages ranging from 0.4% to 7.8%. The most recent quarter produced a modest 1.6% beat, suggesting the Street has been closing the gap between estimates and actual results.

Post-Earnings Price Movement History

ResMed’s post-earnings price movement history reveals a pattern of muted reactions despite consistent beats, with the average next-day move at just 0.3%. The most striking feature is the disconnect between earnings surprise magnitude and stock performance. The September 2025 quarter’s 1.6% beat resulted in a 2.8% extended-hours decline due to restructuring costs and expense concerns.

Expected Move & Implied Volatility

The options market is pricing a 4.2% expected move for ResMed following the earnings release, well above the historical average next-day reaction of 0.3%. This elevated implied move suggests traders are positioning for greater volatility than the stock has exhibited in recent quarters, likely reflecting concerns about margin sustainability and expense trajectory.

Expert Predictions & What to Watch

Key Outlook: Cautiously Bullish

Key Metrics to Watch

The five metrics outlined above represent the key variables that will determine whether the market interprets the quarter as confirmation of the margin expansion narrative or evidence of structural headwinds. The operating expense ratio provides the most direct test of management guidance, while device revenue growth offers the clearest read on underlying demand trends.