RMD - Morgan Stanley rates the stock as Overweight
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Morgan Stanley envisages high single-digit growth in devices in FY18 and mid-teen masks growth. Gross margin is expected to improve to 59.4% in FY19 from 58.4% in FY17.
The broker suspects FY18 guidance for a flat gross margin, which seems to assume no acceleration in mask sales, is conservative. The primary catalyst for positive revisions to earnings per share is still expected to be a sustained improvement in the product mix.
Overweight rating. Industry view is In-Line. Price target is raised to US$88.20 from US$82.70.
Sector: Health Care Equipment & Services.
Current Price is $11.04. Target price not assessed.
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