What Happened?
Shares of medical device company ResMed (NYSE:RMD) fell 4.5% in the afternoon session after Morgan Stanley downgraded the stock to Equalweight from Overweight and lowered its price target.
The investment firm cut its price target on the shares to $230 from $286. The analyst cited several concerns, including limits to near-term profit margin growth and modest earnings expectations.
The downgrade also reflected worries about competitor Philips potentially re-entering the U.S. market for PAP devices, which are used to treat sleep apnea. Additionally, Morgan Stanley noted potential negative effects from the growing use of GLP-1 weight-loss drugs, which may reduce the need for sleep apnea treatments in some patients.
The shares closed the day at $186.34, down 3.9% from the previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy ResMed? Access our full analysis report here, it’s free.
What Is The Market Telling Us
ResMed’s shares are not very volatile and have only had 2 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock gained 3.6% on the news that comments from a key Federal Reserve official bolstered hopes for an interest rate cut.
New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.
ResMed is down 23.7% since the beginning of the year, and at $186.86 per share, it is trading 36.4% below its 52-week high of $293.73 from August 2025. Investors who bought $1,000 worth of ResMed’s shares 5 years ago would now be looking at only $777.08.
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