Resmed trial disappoints, but thesis is intact

Preliminary results from the SERVE-HF trial using adaptive servo-ventilation (ASV) therapy in patients with chronic heart failure did not meet its survival endpoint and in fact, showed a safety signal in this patient population. While disappointing and likely to see shares trade lower overnight, we estimate the earnings impact from this patient population is nominal (less than 3%), it does not affect core obstructive sleep apnoea patients and the trial’s success was not backed into our estimates; thus, our thesis remains intact. We make modest changes to our estimates, with our DCF/PE/SOP-based target price decreasing to A$9.73. We maintain our Add rating.