ResMed Falls 9% on Earnings as Shorts Cover and Analysts Lift Targets

RMD delivered exactly the kind of volatile print that the options market had been pricing, dropping 9% on October 30 after reporting results the previous afternoon, leaving the stock at $229.94 and erasing the pre-earnings run-up documented in last week's note.

The earnings reaction was the week's defining event. The stock fell 8.1% on the day of the print, a move consistent with what options positioning had flagged. The put/call ratio had climbed sharply into the report, reaching 4.25 by October 30, above its 20-day average of 3.38 and roughly 1.2 standard deviations elevated. That hedging demand proved warranted. Management cut FY26 growth guidance for the software segment to mid-single-digit from high-single-digit, and international device sales disappointed, growing just 5% year-over-year against consensus. The $2.81 EPS beat and 62.3% gross margin were not enough to offset the guidance reset. The PCR remains elevated post-print, but the 52-week high of 6.12 was never breached, suggesting hedgers were cautious but not panicked.

Short positioning tells a materially different story from the options market. Shorts covered into the print rather than pressing it: SI % of free float dropped from around 8.9% in early October to 7.9% now, an 8% decline over the past month. The one-week change is down almost 8%, with the largest single-day drop occurring the week of October 20 to 23, as short sellers reduced exposure ahead of the event. Borrow costs remain negligible at 0.50%, and availability is loose at 440%, well above the 52-week low of 216%. There is no squeeze pressure here, and the short score, while elevated at 60.2, has been drifting lower from 63.8 two weeks ago. The direction of short-side activity is clearly covering, not building.

The Street's response to the print was broadly constructive despite the share price reaction. Multiple analysts raised price targets on October 30, the same day the stock fell. RBC Capital lifted its target to $288 from $262, maintaining Outperform. Keybanc moved to $277 from $267, keeping Overweight. Wells Fargo raised to $250 from $215 on an Equal-Weight rating, and Citigroup lifted to $270 from $240 while staying at Neutral. The consensus mean target now sits at $251.51, above the current price of $229.94, implying the Street sees the post-earnings dip as an overshoot on valuation. The analyst recommendation score ranks in the 94th percentile relative to the broader universe, an unusually high reading. The trailing PE has expanded to 19.4x over the past 30 days, and EV/EBITDA has moved to 15.0x, multiples that leave limited room for error if guidance continues to slip.

On the alt data side, ResMed's buyback activity stands out. The company spent $200 million on repurchases in Q2 of fiscal 2026, up 100% on the same quarter a year earlier. ORTEX Alt Data, sourcing from SEC EDGAR XBRL filings, flags this as the largest Q2 buyback spend on record going back to 2010. That capital return is a tangible offset to the growth concerns weighing on the stock. Separately, Wikipedia and ORTEX page-view data show retail attention running 1.6 standard deviations above the stock's own 90-day average as of October 21, a spike that predates the earnings print and likely reflects pre-results interest rather than any fundamental read.

Institutional ownership is stable: BlackRock holds 8.9% of shares, Vanguard entities collectively around 13%, and there are no activist 13D filings on the register. All insider activity in recent months has been conducted under pre-arranged 10b5-1 plans, including the CEO's October option exercise and sale, which removes discretionary signal from those transactions. The next earnings event is scheduled for November 18, just 18 days away, which is an unusually short gap and will keep focus on whether management has more to say about the guidance reset and GLP-1 headwinds before the quarter closes.