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Barron’s said this week that ResMed (NYSE:RMD) trades at a compelling valuation after the stock sold off last month in reaction to positive data for Eli Lilly’s (NYSE:LLY) GLP-1 therapy, tirzepatide, in obstructive sleep apnea, a condition targeted by the MedTech company.
In late June, Lilly (LLY) said tirzepatide, marketed as Zepbound for obesity, met its main goal in a Phase 3 program for OSA, and the pharma giant anticipates a potential label expansion later this year.
ResMed (RMD), which markets masks and CPAP (continuous positive airway pressure) machines for OSA, lost more than 11% in reaction, while Philips (PHG), its main rival in the market, remained flat.
In its latest edition, due on Monday, Barron’s argued that San Diego, California-based MedTech remains attractive despite the selloff.
The publication noted that its products, usually covered by Medicare, offer a “decent value,” as some “last many months.” Even their prices range from under $100 to just over $1,000, compared to about $1,000 or more required for a monthly supply of GLP-1 drugs which include tirzepatide and Novo Nordisk’s (NVO) semaglutide.
Additionally, the company caters to an untapped market, treating “tens of millions” out of nearly a billion individuals estimated to be suffering from mild to severe OSA globally.
Regarding valuation, ResMed (RMD) trades roughly in line with the S&P 500, despite historically trading at a premium to the market.
ResMed (RMD) itself considers GLP-1 use as a tailwind, Barron’s wrote, citing the company’s fiscal Q3 earnings release in which management said that patients on GLP-1s are 11% more likely to initiate positive airway pressure (PAP) therapy devices.