ResMed (RMD) Could Goto $53 -Cramer

July 2, 2008 10:33 AM EDT

Focusing on stocks that will benefit from the upcoming Medicare spending bill currently being considered in both the Senate and Congress, Jim Cramer highlighted ResMed (NYSE: RMD) on last night's Mad Money.

Cramer likes ResMed as it is one of only two large companies that makes medical devices to treat sleep apnea. ResMed currently holds a 40% share of this market, and only directly competes with Respironics.

Jim told viewers of his CNBC show that shares of ResMed have recently been "unfairly hit" due to an announcement that Medicare will start competitively bidding for durable medical equipment. While Cramer does see this as having an impact on earnings, he said, "the earnings wont be hit nearly as hard as Wall Street thinks."

In light of this possible competitive bidding, Cramer believes shares of ResMed could see upside if Congress postpones the next round of competitive bids. Additionally, Cramer said he expects Medicare to provide reimbursements for patients who use sleep apnea equipment in-home starting this fall. With only about 10% of this market currently penetrated, Cramer sees huge growth potential for ResMed, "with or without competitive bidding."

Cramer believes ResMed stock could go as high as $53, meaning investors could bag a cool 30% return from current levels around $38.

ResMed, Inc. engages in the design, manufacture, and marketing of equipment for the diagnosis and treatment of -disordered breathing, including obstructive sleep apnea, and other respiratory disorders that occur during sleep.

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