Pro Medicus Ltd (ASX: PME) shares have suffered from the recent market volatility, just like many other ASX shares in the last few weeks. One fund manager has seen the decline as a compelling buying opportunity.
For readers who don't know, Pro Medicus is a leading healthcare informatics company that provides a full range of medical imaging software and services to hospitals, imaging centres, and healthcare groups.
According to reporting by the Australian Financial Review, portfolio manager Robert Miller from Naos Asset Management was on the hunt for good value opportunities after the latest sell-off.
Miller, nor anyone, could say what's going to happen in the short term with the ASX stock market, but suggested that it was "probably safe to say it will be highly volatile".
The fund manager then said he'd rather follow the wisdom of buying good companies at fair prices and holding for the long term. The indiscriminate selling by the market "can be a wonderful thing" for patient investors who have money to invest.
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What's so attractive about Pro Medicus shares?
The Naos fund manager pointed out that Pro Medicus is achieving an operating profit (EBIT) margin of approximately 80% on additional revenue.
Another positive factor about the business is that it has "little to no customer churn". That means that once clients are signed on as customers, they tend not to leave and end up staying for a long time. There's also evidence that customers who renew contracts are paying more.
The company has also demonstrated its "clear and widening competitive moat". In other words, its economic advantages are growing.
Miller then outlined why the company could continue growing earnings in the coming years and why Pro Medicus shares are attractive despite the global headwinds the stock market is facing:
It is one of the best businesses on the ASX but, justifiably so, it has also been one of the most expensive. The company has experienced a sizeable drawdown over the past few weeks and the company is now undertaking a buyback. Is it now cheap? No. Will it ever be cheap? Probably not. Do the industry tailwinds that underpin its potential growth exist regardless of tariffs and any geopolitical event over the coming four years? Yes.
Valuation
According to the forecasts on Commsec, the Pro Medicus share price is valued at 189x FY25's estimated earnings and 107x FY27's estimated earnings.
