Pro Medicus Ltd (ASX: PME) shares continue their meteoric rise, having recently nudged fresh new highs this week.
The healthcare stock is currently trading at $249.55 apiece, up an astonishing 180% over the past 12 months, having soared 32% this past month alone.
With such electrifying gains, the question we have now is twofold: Does this ASX healthcare darling still have room to run? Or has the ship already left for port? Let's see what the experts think.
Why Pro Medicus shares are flying high
Pro Medicus is in the healthcare imaging technology business. So its profits aren't really that correlated to the broader business cycle. Would you skip an essential MRI in a recession? Exactly.
This year, Pro Medicus shares have been on a tear thanks to the tasty ingredient mix of record-breaking financial performance and massive contract wins.
Pro Medicus announced this week that it secured a ten-year, $330 million deal with US-based Trinity Health. This is the company's largest customer to date.
This follows a string of successes in the North American market, where its Visage 7 Enterprise Imaging Platform is becoming the go-to solution for radiologists.
The Trinity Health contract will see Pro Medicus' fully cloud-based system implemented across 93 hospitals, 107 continuing care locations, and 142 urgent care centres.
In total, this is 342 locations across each of these mediums.
Pro Medicus also reported a good set of FY24 results. Revenues were up 29% over the year, clipping to $161.5 million at the top line with 36% growth in net profit.
As such, every dollar of sales produced $1.24 in net profit, which is not a bad ratio to work with at all.
Is there still upside for Pro Medicus shares?
This is the big question for Pro Medicus shares. While the share price has skyrocketed, according to CommSec, the general consensus on the stock right now is a hold.
The rating is made up of three buys, four holds and one sell.
Goldman Sachs is one of those sitting around the fire in camp buy. The broker says the company's leadership in 'cloud-native imaging' and its growing pipeline of large contracts are bullish points.
In our view, PME is well positioned into FY25 given a full-year benefit of some large and high profile contracts, in addition to the accelerating frequency and size of new contract wins.
We see PME's software Visage 7 as an industry-leading solution with two distinct advantages relative to peers — speed and cloud capabilities — that have influenced the choice of PACS vendor. Given this, PME is benefiting from an industry network effect as more hospitals move to modern systems.
The broker also says moving into factors like artificial intelligence (AI) and cardiology could be the accelerant to Pro Medicus' growth fire.
Consensus projects earnings to expand by 25% per year out to FY26, which is a terrific business result.
Even still, the stock trades are more than 290x trailing earnings at the time of writing. In my view, this should be factored into the debate.
Foolish takeaway
Pro Medicus shares have delivered incredible returns this year. But the company's strong fundamentals and vast growth runway suggest there may still be upside for patient investors.
Even still, consensus rates it a hold.
As is always the case with managing investments, a long-term view is critical. Don't get caught up in the market's short-term machinations.
That way, you can participate in the good fortune of stocks like Pro Medicus, which has increased from $5 per share in 2017 to its current price, nearly 50x growth in value.
