Are these high-flying ASX shares buys today?

Pro Medicus is one of the ASX shares that has been flying higher. Are they buys?

| More on:
asx investor daydreaming about US shares

Image source: Getty Images

There is a small group of ASX shares that have performed really strongly for shareholders recently, delivering impressive operational results and market-beating share price growth.

However, whilst it’s possible for some share prices to be good value, it is also possible that some excellent businesses to run ahead too hard.

So, after a strong run, are these two ASX shares worth looking at?

Pro Medicus Ltd (ASX: PME)

Pro Medicus describes itself as a leading healthcare informatics business. It provides a full range of medical imaging software and services to hospitals, imaging centres and healthcare groups globally. It offers a “clinically rich” and highly scalable cloud platform that can be used for both public and private environments.

The Pro Medicus share price has soared 84% over the last year.

This ASX share has been winning many large contracts with healthcare clients. One of the most recent wins was the 7-year, $40 million contract with Novant Health. Pro Medicus’ Visage software will replace multiple picture archiving and communication systems (PACs).

Novant Health joined an increasing number of Visage clients that are opting for a fully cloud based solution.

Despite winning a number of contracts, Pro Medicus says that its pipeline remains strong in both North America and other regions. FY21 was a big year of growth – revenue rose 19.5% to $67.9 million, underlying profit before tax increased 41% to $42.6 million and the earnings before interest and tax (EBIT) margin improved to 63.2%.

Opinions are somewhat mixed on Pro Medicus. Morgans rates the ASX share as a hold, with a price target of $54.49.

However, Citi thinks Pro Medicus is a sell with a price target of just $45 – that’s almost 30% lower than where it is now. It’s concerned about cheaper competition in the future and that the market is being too bullish about the potential strength of the company’s success.

Aussie Broadband Ltd (ASX: ABB)

This telecommunications business has also had a year strong year. Over the last 12 months it has gone up by 136%.

Aussie Broadband continues to see growth of its broadband user base.

At 30 September 2021 it had 445,780 broadband services. By 30 December 2021 it’s expecting to have at least 482,495 services which includes expected organic net additions of at least 38,000. That’s organic growth of at least 8.5% quarter on quarter.

A recent focus of both analysts and the company has been the expected acquisition of Over The Wire Holdings Ltd (ASX: OTW). This combination is predicted to deliver annual cost synergies of $8 million to $12 million within three years, ongoing capital expenditure savings and significant acceleration of capabilities of the group.

This proposed transaction, which will be funded by both cash and new shares, is expected to add to earnings per share (EPS) on both a pre and post synergy FY21 basis.

Ord Minnett is a fan of the deal, as it would grow the company’s offering into other categories.  It rates Aussie Broadband as a buy, with a price target of $5.91.

Credit Suisse’s price target of $5.40 also offers potential double upside, but the broker is only ‘neutral’ on the business.

Ord Minnett thinks that the Aussie Broadband share price is valued at 34x FY23’s estimated earnings.

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

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

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Pro Medicus wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

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

More on Broker Notes

Woman on her laptop thinking to herself.
Broker Notes

2 ASX All Ordinaries shares top brokers rate as buys

Here are the latest buy-rated shares from two leading brokers.

Read more »

A woman sits at her computer with hand to mouth and a contemplative smile on her face although she is considering or thinking about information she is seeing on the screen.
Broker Notes

Brokers: 2 ASX 200 shares that could be top buys for growth

Brokers think these ASX 200 shares with growth potential could be leading opportunities.

Read more »

ASX shares Business man marking buy on board and underlining it
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers rate these ASX shares as buys...

Read more »

outperforming asx share price represented by row of white eggs with cartoon sad faces with one gold egg with happy face and crown
Broker Notes

This is the best ASX bank share to buy in a rising rate environment: Citi

Only one major bank is sticking to its cost-savings goals, according to the broker.

Read more »

A woman sits at her computer in deep contemplation with her hand to her chin and seriously considering information she is receiving from the screen of her laptop regarding the Xero share price
Broker Notes

Is the Fortescue share price cheap after dropping 10% in a month?

We check what brokers have to say on the iron ore giant.

Read more »

A business man in soft-focus holds two fingers in the air in the foreground of the shot as he stands smiling in the background against a clear sky.
Broker Notes

Buy these 2 ASX shares on sale right now: top broker

A top broker has revealed two ASX shares which have fallen heavily but look like good buys.

Read more »

Three analysts look at tech options on a wall screen
Technology Shares

3 ASX tech shares we’re sticking with: Forager

Share prices have plunged, we know. But if the business is still performing then the market will catch up sooner…

Read more »

Red buy button on an apple keyboard with a finger on it.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers are feeling positive about these ASX shares...

Read more »