Pro Medicus (ASX:PME) share price rockets 16% on earnings beat

This healthcare technology company’s shares were the best performers on the ASX 200 today…

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The Pro Medicus Limited (ASX: PME) share price was the standout performer on the S&P/ASX 200 Index (ASX: XJO) on Thursday.

The healthcare technology company’s shares were up as much as 16.5% to a record high of $65.90 before finishing the day up 15.5%.

The Pro Medicus share price is now up 86% since the start of the year.

Why did the Pro Medicus share price rocket higher?

Investors were bidding the Pro Medicus share price higher following the release of an impressive full year result this morning.

For the 12 months ended 30 June, the company reported a 19.5% increase in revenue to $67.9 million and a 43% jump in earnings before interest and tax (EBIT) to $42.7 million.

This was driven by the implementation of a series of major contract wins and further operating leverage.

Also giving the Pro Medicus share price a boost were comments by management. It advised that although FY 2021 was a record year on new contracts, its pipeline remains very healthy in respect to quality and quantity.

How does this compare to expectations?

Although its revenue fell a touch short of the market’s expectation of $70 million, this was largely due to foreign exchange headwinds.

Positively, despite its revenue missing, its EBIT was ahead of the consensus estimate of $41.6 million thanks to stronger than expected margin expansion.

Goldman Sachs has commented on the result. It said: “Group revenue of $67.9m fell -3% short of consensus expectations as revenue growth for the core PACS segment of +18% (to $55.3m) fell short of our expectations of +26% (to $59.0m). However, on a constant currency basis, revenue grew +30% to $74.0m, likely explaining the majority/all of the miss.”

“Furthermore, EBIT grew +43%, coming in +3% ahead of expectations, as margins increased +1,036bps (vs. cons +690bps). Net income grew +34% to $30.9m and period-end cash grew +42% to $61.8m, and the company remains debt-free.”

Is it too late to invest?

Goldman Sachs currently has a neutral rating and $55.60 price target on its shares. This compares to the current Pro Medicus share price of $65.35.

However, it has yet to update its model to reflect this result. So, there’s a chance in the coming days it could lift its price target higher. Investors may want to stay tuned for that one.

Should you invest $1,000 in Pro Medicus right now?

Before you consider Pro Medicus, you'll want to hear this.

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*Returns as of January 13th 2022

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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