Pro Medicus Limited (ASX: PME) shares have been among the best performers on the ASX 200 index over the last 12 months.
During this time, the ASX 200 tech stock has risen an impressive 60%.
But if you were thinking the health imaging technology company's shares have now peaked, think again.
That's because analysts at Goldman Sachs believe that there could be more big returns ahead for investors.
What is Goldman saying about this ASX 200 tech stock?
According to a note from this morning, the broker has initiated coverage on Pro Medicus shares with a buy rating and a $134.00 price target.
Based on its current share price of $101.89, this implies a potential upside of almost 32% for investors over the next 12 months.
Why is Goldman bullish?
Goldman is feeling very positive about the ASX 200 tech stock's outlook due to its Visage 7 cloud-native picture archiving and communication systems (PACS) offering. It commented:
We believe Visage 7 is core to many healthcare institutions, providing efficiency gains in a market where demand for imaging continues to grow and radiologist shortages persist. Visage 7 has two advantages vs peers: speed and cloud capabilities, that have influenced the choice of PACS vendor, evident in the increasing cadence of PME's major contract wins.
The broker believes that the platform positions the company perfectly to almost double its market share in the United States in the coming years. It adds:
We see PME as well positioned into FY25E given a full year benefit of some large and high profile contracts (i.e. TCV >A$200m announced in 1H24), with long-term growth driven by: (1) growth in scan volumes given shift towards preventive medicine (+3% p.a.); (2) US market share gains to 13% in FY30E (c.7% today) as hospitals move to modern, cloud systems; (3) mid-high single digit price rises p.a. for new contracts, with renewals tracking at (or near) 100% given PME's competitive moat; and (4) growth opportunities in adjacent solutions.
Another reason the broker is positive is its artificial intelligence (AI) exposure.
We believe PME is well positioned to take share as the incumbent viewing platform across many large, and likely early adopters of new technology. PME is generating revenue from its Visage breast density AI algorithm (developed via a partnership with Yale) today, and we see the potential value for AI to be significant with adoption driven by improved accuracy and clinical outcomes. We forecast AI to comprise 9% of PME's revenue by FY30E (from <1% in FY25E), with upside if PME achieves faster AI attach penetration, higher price per scan, and a greater proportion of algorithms developed in-house where no royalties are paid to a partner.
All in all, this could be a great ASX 200 tech stock to buy if you're looking for exposure to this side of the market.
