ResMed stock a buy despite Lilly impact: Barron’s (NYSE:RMD)

Baron This week, he said that ResMed (NYSE:RMD) is trading at a compelling valuation after the stock sold off last month in response to Eli Lilly’s positive data.NYSE:LLY) GLP-1 therapy, tirzepatide, in obstructive sleep apnea, a condition targeted by Med Tech Company.

In late June, Lilly (LLY) announced that tirzepatide, marketed as Zepbound to treat obesity, had met its main goal in a phase 3 program for obstructive sleep apnea, and the pharmaceutical giant expects a potential brand expansion later this year.

ResMed (RMD), which markets CPAP (continuous positive airway pressure) masks and devices for obstructive sleep apnea, lost more than 11% in reaction, while Philips (PHG), its main market rival, remained flat.

In its latest issue, due out on Monday, Baron He claimed that the San Diego, California-based medical technology companies remain attractive despite the sell-off.

The magazine noted that its products, which are typically covered by Medicare, offer “decent value,” with some “lasting for months.” Even their prices range from less than $100 to just over $1,000, compared with the $1,000 or more required for a month’s supply of GLP-1 drugs that include Novo Nordisk’s tirzepatide and semaglutide.

Additionally, the company serves an untapped market, treating “tens of millions” of the estimated one billion people who suffer from mild to severe obstructive sleep apnea worldwide.

In terms of valuation, ResMed (RMD) is trading roughly in line with the S&P 500, despite historically trading at a premium to the market.

ResMed (RMD) itself sees the use of GLP-1 as a tailwind, Baron Patients taking GLP-1s are 11% more likely to start using positive airway pressure devices, the company wrote in its third-quarter earnings report.