RMD
ResMed Inc.
$198.61
Platform & Compounding FCF
65%
Two-stage FCF DCF
Moderate
·
Conviction
Undervalued
Trading 32.5% below fair value
You pay
$198.61
Bear
$195.69
Fair
$294.42
Bull
$401.13
Bear
$195.69
-1.5%
8% stage 1 growth, 11% discount
Fair
$294.42
+48.2%
14% stage 1 growth, 11% discount
Bull
$401.13
+102.0%
18% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (14% base case)
Terminal Value % of EV
42%
Implied Market Multiple
17.9x
Market is pricing in (growth)
7.5%
vs 13.8% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $242.00 from 35 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $294.42 per share.
Warnings
Wall Street's average price target is $242.00 (from 35 analysts). Our estimate is 31% above the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions