Rob, keep RMD on your watch list. Great company...no bull shit.
>NEW YORK, May 2 (Reuters) - Shares in medical equipment maker ResMed Inc. (NYSE:RMD) surged 21 percent to an all time high on Wednesday after the company reported better-than-expected fiscal third-quarter earnings.
ResMed, which makes and distributes medical equipment for the treatment of breathing-related sleep disorders, has beat analyst expectations in 15 out of the last 26 quarters and has never missed forecasts in the last five years, according to Thomson Financial/First Call.
The company, which was founded in Australia but is now based in San Diego, said on Tuesday its quarterly earnings were 24 cents a share, 3 cents better than the 21 cents estimated on average by analysts as polled by market research firm Thomson Financial/First Call.
"(The gain) is not surprising given the great news and the company's top-line growth," said Gideon Bernstein, a money manager who covers the healthcare industry for The Keller Group's $1 billion in client assets.
In the fiscal third quarter, revenue grew by 33 percent, compared to the 21 percent expected by analysts, said Bernstein.
ResMed shares jumped $9.91, or 21.83 percent, to 55.31 on the New York Stock Exchange and earlier touched an all-time high of $56.
It was the best performer in percentage terms on the S&P 600 small cap index on Wednesday with some 1.28 million shares changed hands on the Big Board by 2 p.m. New York time, eight times the three-month average daily volume.
Short sellers attempting to reduce their losses as the stock gained accounted for some of the advance, said Bernstein.
The NYSE reported 5.6 million short positions in ResMed in April, an increase of 634,400 in the number of shares sold short from March.
Short selling means investors borrowed shares with the hope of buying back the stock at a lower price, returning the stock and profiting from the difference.
ResMed is trading at 49 times its 2001 estimated earnings, according to Thomson Financial. "It's a rich valuation for me," said Bernstein, adding that ResMed has one of the highest ratios among medical devices companies, which have an average price-earnings ratio of 24, said Bernstein.
"Companies that have built up such reliable earnings are usually best rewarded by the market," said Michael Yeller, a money manager at AIM Global Healthcare Fund.
Wednesday's jump in the stock price sent it to some analysts' 12-month price targets. Robertson Stephens analyst Wade King raised his investment rating for ResMed to buy from long-term attractive and said the stock's 12-month price target was $54. ResMed passed King's price target today.
"We believe that ResMed offers one of the most consistent and open-ended growth opportunities going forward in medical technologies today," said King in a note to clients. |
