ResMed Inc (ASX: RMD)
Double digit growth backed by innovation: ResMed announced the results for its Second Quarter for the Fiscal Year 2018 wherein revenue for the quarter was $601.3 million, which is a 13% increase as compared to the same period of the prior year based on its strength of the product profile. In fact, in the second quarter, the revenue in United States, Canada and Latin America, excluding Brightree was $329.2 million, which is a 12% increase over the same period of the prior year. The gross margin in the second quarter was 58.2%, slightly lower than the prior year’s quarter gross margin of 58.3%, which was mainly due to the decline in the average selling prices partially offset by the manufacturing and procurement efficiencies. The board also declared a quarterly cash dividend of $0.35 per share. RMD received a waiver from the ASX’s settlement operating rules which will allow ResMed to defer the processing conversions between its common stock and the CDI registers from February 7, 2018 till February 8, 2018. There was a change in the US tax reform which revised the U.S corporate income tax rate from 35% to 21% and this will lead to a reduction of net deferred tax assets and an increase in income tax expenses of $6.7 million. The group at its R&D and commercial front, intends to launch a portable oxygen concentrator (Mobi) in third quarter. RMD stock was up 8.4% on January 23, 2018 after the release of its second quarter sales results. At the back of the high run-up and tax expenses, we think that the stock is “Expensive” at the current market price of $11.97
Domain Holdings Australia Limited (ASX: DHG)
Dousing the recent unsettled trading scenario: Domain Holdings seems to have regained its lost lustre on January 23, 2018 with 9.1% rise in stock price. The group rose up with the speculation that Greg Ellis, CEO of Germany’s Scout24 might be replacing the outgoing Chief Executive Officer Mr Antony Catalano, who has resigned from his role recently. Meanwhile, its chairman, Nick Falloon has been indicated to be acting as Executive Chairman. The group will publish its FY18 first-half financial results on 19 February 2018 and expects its digital revenue to grow at 22% against the same period of the last year and also a total growth of 13% is expected in line with the trading update provided on 22, September 2017. However, the group faces concerns over the direction in which the company is heading. It will be thus crucial to watch the developments on this stock. We give an “Expensive” recommendation at the current market price of $3.00
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