Image source: Shutterstock

Highlights

  • ResMed secures U.S. tariff exemption, shielding Australian and Singaporean exports.

  • The company reports an 8% revenue rise in Q3 FY2025, reaching US$1.3 billion.

  • Broker confidence grows, with several firms assigning price targets above $43.

Medical device maker ResMed Inc (ASX;RMD) has received a notable boost after being granted a tariff exemption under the U.S. administration’s current trade policy. This exemption means that exports from its facilities in Australia and Singapore are set to bypass tariffs imposed as part of ongoing international trade disputes, offering relief to the company’s global operations.

According to the Australian Financial Review, ResMed's exemption stems from its adherence to the Nairobi Protocol, a longstanding international agreement that allows duty-free treatment for goods designed to aid people with disabilities. Chief Executive Mick Farrell confirmed that the exemption applies to the company’s sleep devices and masks, manufactured in both Australia and Singapore.

Farrell noted that the exemption is unlikely to generate meaningful tax revenue for the U.S. government, making a reversal of this policy an unattractive move politically. However, he acknowledged that some level of unpredictability remains, given the White House’s control over tariff-related decisions. “Nothing is guaranteed when an administration, particularly this one, can change direction so quickly,” he told AFR.

ResMed’s market performance has reflected growing investor optimism. Shares have risen more than 5% over the past month, with the rally partly fueled by a positive quarterly update. For the three months ended 31 March 2025, the company reported an 8% increase in revenue, totalling US$1.3 billion. This growth was supported by elevated demand for its sleep-related products and advancements in its Software as a Service (SaaS) division.

Gross margins improved by 140 basis points, reaching 59.3%, while income from operations climbed by 14% during the same period. The figures have caught the attention of analysts and investors alike, boosting the company’s stock outlook.

Broker sentiment appears favorable. Macquarie has set a price target of AU$48.00 for ResMed shares, representing a potential 30% upside from the current trading price of AU$36.75. Goldman Sachs has also reaffirmed its buy rating, lifting its target to AU$49.30, partly influenced by the tariff exemption. Bell Potter is similarly optimistic, assigning a valuation of AU$43.31.

Meanwhile, ResMed continues to expand its footprint in the United States. It is currently developing a new manufacturing facility in Calabasas, California. CEO Farrell emphasized that the expansion is not a response to U.S. trade policies but part of the company’s broader long-term planning.

Jed Richards of Shaw and Partners supports the buy outlook, citing ResMed’s consistent revenue trajectory and innovative product lines. He highlighted the April 24 earnings update as a positive sign of the company’s operational performance.