Our stock picking expert says ResMed is a quality business now facing two new headwinds: weight-loss drugs and the return of a big rival. Speaking on Switzer TV, he explained why he’s treading carefully. Here’s the read.
ResMed makes the machines and masks that treat sleep apnoea, the condition where breathing stops and starts through the night. It has been one of the most reliable earners on the ASX.
On the show, host Peter Switzer noted ResMed has grown earnings per share, the profit attributable to each share, by close to 19 per cent a year over three years, and tends to beat what the market expects. So why is Dawes cautious?
The weight-loss drug question
The first headwind is the GLP-1 weight-loss drugs, the class that includes Ozempic and Wegovy. Excess weight is a driver of sleep apnoea, so a thinner population could mean fewer patients over time.
“Americans are getting skinny, and there’s less chance of snoring,” Dawes said.
Philips comes back
The second is competition. Rival Philips left the market after a device recall, and Dawes expects it back.
“Philips by 2027 will be in the market,” he said. That prospect, along with a few broker downgrades, is why he is not chasing the stock here.
He was clear it remains a business he rates.
“If they stuff up again and they get a product recall, ResMed is a monster, it’s a buy,” he said. “I just think you’ve got to be a little bit careful with ResMed.”
Watch the full interview:
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