ResMed Receives Analyst Upgrade as GLP-1 Displacement Fears Recalibrated

The Quick Take

• ResMed (RMD) received an analyst rating upgrade following evidence that demand for its CPAP and sleep therapy devices remains robust despite concerns about GLP-1 weight loss drugs reducing the sleep apnea patient population
• The upgrade reflects recalibrated expectations that the addressable market is substantially larger than diagnosed rates suggest, limiting near-term displacement risk from Ozempic-class drugs
• ResMed's connected device platform and software recurring revenue layer add defensive earnings characteristics that pure hardware medical device peers lack

ResMed (NYSE: RMD) received an analyst rating upgrade as research addressing the most significant overhang on the stock — the potential displacement of sleep apnea patients by GLP-1 drugs such as semaglutide — came to more constructive conclusions than the market had feared. The concern that drove significant underperformance in ResMed shares centered on the hypothesis that, as patients lose weight using Ozempic or similar agents, the sleep apnea condition causing their need for CPAP therapy would resolve. While this effect is real in a subset of patients, the upgrade thesis argues that the addressable sleep apnea market is dramatically underpenetrated — with approximately eighty percent of sufferers still undiagnosed — providing a long runway for device adoption that more than offsets GLP-1 displacement.

The structural demand characteristics of ResMed's market provide additional resilience. Sleep apnea has a complex etiology that includes anatomical factors, genetics, and age-related muscle tone changes not directly addressed by weight loss. Heavy and obese patients represent only a portion of the sleep apnea population, with a meaningful cohort of normal-weight individuals suffering from the condition due to non-weight-related factors. Moreover, compliance with GLP-1 drug regimens involves cost barriers and side effect tolerability issues — a significant share of initiated patients discontinue treatment, potentially maintaining CPAP dependency for those patients. The net demand impact on ResMed is thus more neutral than the initial bearish narrative suggested.

The upgrade also highlights ResMed's AirSense connected platform and its software-as-a-service component, which provides remote patient monitoring, therapy compliance tracking, and prescribing physician analytics. This recurring revenue stream generates gross margins substantially above the device hardware segment and provides earnings stability that decouples partially from device unit volumes. At current valuation levels following the prior share price decline, the upgrading analyst argues the risk-reward is favorable as the GLP-1 displacement thesis reprices from its most bearish form toward a more moderate long-term impact scenario.

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