The firm also lowered its price target to $58 from $60 on shares of the San Diego-based respiratory treatment equipment manufacturer.
Jefferies said that lower Medicare rates effective July 1 are pressuring private rates and are expected to lead to further consolidation in the durable medical equipment (DME) market.
ResMed's lightweight humidifier AirSense10 is "still in the lead" among other continuous positive airway pressure (CPAP) devices.
But the firm noted that competitor Philips' newest model of its own CPAP device Dream has "closed the gap and is cheaper." Philips' product is offered at a 10% to 15% discount to ResMed's.
Jefferies added that ResMed stock faces further risks such as share shifts, pricing, reimbursement and litigation.
More than 2.63 million of the company's shares traded so far today vs. the 30-day average of roughly 852,000 shares daily.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "buy" with a ratings score of A.
The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
You can view the full analysis from the report here: RMD