Highlights

  • ResMed (ASX:RMD)’s ASX-listed securities fell sharply on Monday 2 November, dropping 6.17%, or $2.19, to $33.32.
  • In effect, the local line caught up with what had already happened on Wall Street.
  • Growth in sleep devices, masks and residential care software was partly offset by a decline in sales of life-support devices.
  • For investors, a slowdown in the top-line growth rate can matter more than a modest beat against consensus.

ResMed (ASX:RMD)’s ASX-listed securities fell sharply on Monday 2 November, dropping 6.17%, or $2.19, to $33.32. The decline was one of the more notable falls on the S&P/ASX 200, which closed down 0.6% at 8,856.50 as the local market snapped two straight sessions of gains. The ResMed move, however, appears to have had less to do with Monday’s general selling than with a delayed reaction to the company’s latest quarterly results, which investors in New York had already had a chance to digest.

ResMed released its fiscal first-quarter FY27 results on 29 October in US time, which was 30 October in Australian Eastern Daylight Time. On Friday 30 October in New York, its NYSE-listed shares fell 9.1% to US$229.94, on a day when the S&P 500 lost 1.8%. The New York session runs overnight in Australian time, after the local market had already shut for the week, so Monday was the first opportunity for holders of the ASX-listed CDIs (CHESS Depositary Interests) to respond to that move. In effect, the local line caught up with what had already happened on Wall Street.

Market Context

At first glance the result itself did not look like a disappointment. adjusted Earnings Per Share of US$2.91, ahead of expectations of US$2.69, and Revenue of US$1.41bn, slightly above the US$1.39bn that had been expected. On those headline measures, ResMed beat forecasts on both earnings and sales.

The detail that appears to have weighed on sentiment was the pace of growth. Revenue rose 5.9% year on year, which was the slowest growth in five quarters. Growth in sleep devices, masks and residential care software was partly offset by a decline in sales of life-support devices. For investors, a slowdown in the top-line growth rate can matter more than a modest beat against consensus.

The broader backdrop did not help. The ASX healthcare sector fell 0.8% on Monday, and the session was risk-off across the board: 702 decliners against 376 advancers, with 312 unchanged, and the S&P/ASX 200 VIX rose 5.86% to 11.46, a one-month high. That nervousness followed Friday’s sell-off on Wall Street, where the Nasdaq fell 2.9% as investors dumped technology and AI-related stocks. Those conditions may have added some pressure, although the bulk of ResMed’s fall lines up with the earlier move in its US shares rather than with the local market mood.

Developments and Outlook

The ASX decline was smaller than the fall on the NYSE, but the two figures are not directly comparable. The ASX securities are priced in Australian dollars, the currency moves between sessions, and Monday’s local trading had its own conditions. The simplest reading is that Monday’s fall largely reflected the Friday reassessment in New York, with local holders adjusting to a price that had already been set overseas while the ASX was closed.

Looking ahead, investors will likely watch how ResMed’s NYSE shares trade in the sessions after the results, since the ASX line tends to follow its primary listing. On the local front, the Reserve Bank of Australia hands down its decision on Tuesday 3 November, with a Reuters poll pointing to a fifth hike this year to 4.85%. Any shift in broader risk appetite could influence healthcare stocks along with the wider market, but the key question for ResMed holders is whether the slower growth seen in the first quarter persists.