Pro Medicus Ltd (ASX: PME) shares are marching higher today.
Shares in the S&P/ASX 200 Index (ASX: XJO) health imaging company closed on Friday trading for $223.58. In early afternoon trade on Monday, shares are changing hands for $228.29 apiece, up 2.1%.
For some context, the ASX 200 is just about flat at this same time.
That kind of outperformance is nothing new for Pro Medicus shares, which are up 128.5% since this time last year.
But the past month has been a different story.
In fact, Pro Medicus stock has slumped 23.2% since hitting a record closing high of $297.14 a share on 19 February.
And that sell-off has caught the attention of Morgans's Damien Nguyen (courtesy of The Bull).
Time to buy Pro Medicus shares?
"Pro Medicus is a high quality, capital light healthcare technology company with a dominant position in radiology imaging software," said Nguyen, who has a buy rating on Pro Medicus shares.
The first reason he said he's bullish on the outlook for the ASX 200 healthcare stock is that "it benefits from strong structural tailwinds in AI (artificial intelligence) driven medical imaging".
The second reason Nguyen said Pro Medicus could keep outperforming is its "high margin recurring revenue model and ongoing contract wins with top tier US hospitals".
And the third reason Pro Medicus shares are a buy is the company's ongoing growth potential.
According to Nguyen:
With no debt, a growing cash balance and scalable business model, PME is ideally positioned for long-term growth. It has won several key contracts in recent years, showing continuing momentum.
And with shares down some 23% in a month, today's levels could present a long-term bargain.
"We see the recent sell-off as an attractive entry point," Nguyen said.
What's the latest from the ASX 200 healthcare stock?
Pro Medicus reported its half-year results on 13 February.
Highlights included a 32.2% year-on-year increase in total revenue to a record high of $100.8 million.
And with net profits up 42.7% to an all-time high of $51.7 million, Pro Medicus rewarded passive income investors with a fully franked interim dividend of 25 cents per share, up 38.9% from last year's interim dividend.
Commenting on the outlook for Pro Medicus shares at the time, CEO Sam Hupert said, "We continue to see many opportunities in the USA – many on the back of the annual RSNA conference which in 2024 was our biggest to date."
Hupert added:
Our modular approach also continues to provide flexibility and scalability, as evidenced by the increasing number of clients choosing the full stack of all three Visage products – Viewer, Workflow and Archive as well as existing clients in Duke and NYU adding modules, trends we see continuing.
With market expectations clearly high, Pro Medicus stock closed down 3.2% on the day the company reported.
