The Pro Medicus Limited (ASX: PME) share price is up 1% to $51.83 at the time of writing.
The ASX healthcare share got a bit of a plug from two analysts today. Let's see what Hayborough Investment Partners' Ben Rundle and Medallion Financial's Michael Wayne had to say.
Pro Medicus share price a buy: experts
In a Livewire interview, Rundle said the ASX 200 darling is a buy despite its eye-watering valuation.
Westpac data shows the Pro Medicus share price is trading on a price-to-earnings (P/E) ratio of 105.18.
That's almost five times the healthcare sector of 21.83 and seven times the broader market P/E of 14.79.
In its FY22 full-year results released in August, Pro Medicus reported a net profit of $44.4 million, up 44.1% on FY21, and no debt.
Rundle said:
Look, I recognise that it's on an eye-watering valuation, but it's just such a high-quality business. The quality of its earnings is fantastic, it has a fantastic management team, and a great product.
It's really hard to bet against this company. It has all the qualities of a compounder, and therefore I think it keeps compounding.
Wayne added his buy endorsement, too:
It's one that we've held for some time and continue to like it. You look at the balance sheet, all those key metrics are trending in the right direction — revenue, earnings, margins, and return on equity (ROE).
They developed a very good product, and have been able to go out and market it very well and win very high-quality contracts. A lot of their contracts are six to eight years. A lot of those have been renewed and rolled over.
They've also got a good backlog of inquiries for different tenders.
What's next for Pro Medicus?
Wayne said he was keeping an eye on the expansion of Pro Medicus and the take-up of its product.
He explained:
One concern that we might have just to be careful of long term is they've targeted the academic hospitals in the US (private academic hospitals). They've been very successful there. A lot of those hospitals aren't as cost-conscious as some of the others, so they might struggle to have as much of an impact on the broader hospital network in the US.
However, it's a proven product. It's very, very technologically advanced and can save a lot of time within those hospital operations.
Pro Medicus announced yesterday that it will hold its annual general meeting on 21 November.
