Pro Medicus Limited (ASX: PME) shares were under pressure on Thursday.
After initially charging to a record high, the health imaging technology company's shares ended the session 3% lower at $279.08.
This was driven by the release of a very strong half year result, which fell just a fraction short of the market's lofty expectations.
Should you buy Pro Medicus shares?
The team at Bell Potter thinks investors should be jumping on Pro Medicus shares following yesterday's pullback.
According to a note this morning, the broker has upgraded the company's shares to a buy rating with an improved price target of $330.00 (from $260.00).
Based on its current share price, this implies potential upside of 18% for investors over the next 12 months.
Commenting on the result, the broker said:
PME reported 1H25 revenues of $97.2m relative to consensus of $100m hence a 2% miss at the top line. EBITDA $72.9m relative to market consensus of $75m. PME continues to stick to core business of Visage 7, workflow, archive and data migration services where demand for its offering is increasing despite price rises and an influx of approvals of AI tools in the radiology space (but little/no reimbursement).
The ongoing shortage of radiologist is showing no sign of abating, hence the productivity improvements delivered by the Visage platform remain a fundamental driver.
What else did the broker say?
Bell Potter also spoke very positively about the company's prospects in private radiology. It adds:
PME continues to win good new business in its traditional client base of Academic Medical Centres and Independent Delivery Networks, however, the recent win at Duly Health is pivotal. Private radiology is the lowest margin work in the sector and for this reason there has been considerable consolidation. For PME to win an RFP in this space would have been unheard of up until now and in our view this is another affirmation of the value proposition.
In light of the above, the broker thinks now is a great time to buy Pro Medicus shares for the long term. It concludes:
The PME full stack solution continues to wipe the floor with competitors – 10 contract announcements in the LTM including two new academic medical centres clients. FY25/26 revenues upgraded by 4% and 2% respectively. In addition we expect further growth in the cardiology space with the first small scale implementation to take place in April 2025. Following earnings revisions we upgrade to Buy and price target $330.
