Fast forward to this week, the release of December quarter financials suggests the death of
The negative trend that had persisted for six quarters in succession has now been broken. Analysts have been busy remodeling a higher gross margin and what it means for the quarters/years ahead. Company management is confident the gross margin will not only not return to last year's level, but it will further improve over the years ahead.
And the share price? The price is back to where the shares were trading when hedge funds initiated their attack. Yesterday's close just under
The return of margin confidence has led to upgraded EPS growth forecasts (in USD) of respectively 18.4% and 21.5% for this financial year and next. FNArena's consensus price target lifted to
The one key factor that had gone missing, albeit temporarily, post August last year is the global sleep and respiratory care markets are huge, and penetration by the likes of
Diagnosis levels remain low with the most-developed sleep market, the US, only having a 20% diagnosis rate. This is why a company like
Reading through analysts' updates post this weeks market update, some are toying with the idea
The future will tell. Meanwhile, the vast size of the opportunity that resides with obseity and all its treatments and related devices remains a significant attraction for the pharma industry so don't expect any pause in the efforts from
And yet, this is not the full extent of this saga just yet...
Philips' troubles extend into its healthcare operations, including CPAP and other medical devices. Philips has not been able to sell its Respironics competing devices in the lucrative US market since 2021. Oddly enough this too has weighed on the
That prospect has yet again been dealt a blow this week with Philips and regulatory authority FDA agreeing Philips will not sell any new CPAP or BiPAP devices in the US for longer. Respironics will only service and support existing patients. Most analysts had been incorporating the Philips market re-entrance in their modeling from early 2024 onwards.
Philips' announcement coincided with the decision to slim down its suite of products and services. CPAP machines have not been abandoned, and the company continues to sell them outside of the
Under the FDA agreement, any re-entrance into the US market will be spread out over multiple years.
Before problems started that led to the recall of millions of breathing devices and ventilators three years ago,
Incidentally, there's plenty of anecdotal evidence around the reputational damage done to Respironics' competing CPAP devices is large, and potentially permanent. New patients are overwhelmingly opting for
Analysts thus far have been hesitant to make bold statements about what this fresh development means for
The obvious observation to make from the sideline is that
And as far as that analyst advice from last year is concerned: clearly, there's more to share market research than doing the numbers and making numerical assumptions. In-depth knowledge about a company and its industry are simply a necessity.
Investors take note.
(Plus, I am sure, there are a number of lessons to be gained from this experience).
See also: https://fnarena.com/index.php/2024/01/29/resmed-makes-a-comeback/
https://fnarena.com/index.php/analysis-data/all-weather-stocks/
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