ResMed has delivered the earnings reaction that reduced hedging demand had stopped anticipating — a 5% drop on August 7 after the August 6 print — and the post-results setup now looks notably different from the light-positioning picture described in this week's earlier notes.
The stock closed at $211.94, down 5.1% on the day following results, though it remains fractionally positive on the week after the pre-earnings rally. That combination — a stock that ran into a print and then sold off sharply — is the week's central tension. The next scheduled event is October 29, leaving roughly twelve weeks before the market gets another formal read.
The analyst response was immediate and directionally consistent: targets moved lower across the board, with no firm willing to upgrade into the weakness. Wells Fargo cut to $215 from $225 and held Equal-Weight. Piper Sandler trimmed to $225 from $233 at Neutral. Keybanc shaved to $255 from $260, retaining Overweight. RBC Capital, bucking the trend slightly, raised its target to $244 from $234 while keeping Sector Perform — a modest show of support after having cut aggressively in early July from $321 to $276. The mean consensus target now stands at $247, implying roughly 17% upside from current levels, but that gap largely reflects targets set before the print rather than fresh conviction. The bear case is clear: management guided FY26 segment growth to mid-single digits, down from the high-single-digit expectation, and international device sales disappointed. The bull case rests on a 62.3% gross margin beat and mask sales up 16% year-on-year — enough to keep bulls engaged but not enough to offset guidance anxiety.
Positioning is the area where the most has changed since the pre-earnings articles. Short interest edged fractionally higher on August 6 to 13.2 million shares, or 9.0% of free float — essentially flat on the week after the big unwind from 14.8 million in mid-July. That unwind has now stalled; shorts did not cover further into the print, nor did they press aggressively. The lending market remains unconstraining: availability at 262% of short interest means roughly two-and-a-half shares are available to borrow for every one already shorted, and cost to borrow at 0.48% is near its lowest level of the past six weeks. There is no friction on either side. Options, however, have moved sharply. The put/call ratio at 1.04 is now near its 52-week low of 1.02 — the lowest defensive posture in a year — and sits almost 1.2 standard deviations below its 20-day mean of 1.55. As recently as mid-July, the PCR was running above 2.0. The collapse in hedging demand preceded the selloff, which makes the current near-floor reading worth watching: with the stock now lower after the print, the question is whether options buyers rebuild protection or treat the pullback as absorbed.
The insider picture adds a layer of context. CEO Mick Farrell sold just under 5,000 shares on July 7 at $218.55, a routine-sized transaction consistent with his monthly cadence since at least March. Founder Peter Farrell sold 8,000 shares on August 5 at $225 — the day before the print — for $1.8 million. Neither trade is sized to suggest unusual conviction, and the 90-day net figure of roughly 23,000 shares net sold at approximately $4.9 million reflects the rhythm of a management team running a pre-set disposal programme rather than signalling a specific view on near-term results. The institutional register is stable, with BlackRock and State Street both reporting small additions as of July 31, while Morgan Stanley trimmed modestly in Q1.
Among correlated peers, the RMD post-earnings drop stands out. ISRG gained 7.2% on the week and BDX added 6.8%, while BAX rose 5.3%. ResMed's modest weekly gain masks the sharp single-day reversal — peers broadly had a constructive week in medtech, making the RMD reaction look company-specific rather than sector-driven.
What to watch from here: whether short interest begins rebuilding from its current 9% base as guidance disappointment settles in, and whether the put/call ratio — now at a year-low — starts recovering toward its historical average as the market digests a print that delivered margin beats but cut the growth ceiling.
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