Pro Medicus Ltd (ASX: PME) shares are slipping today.
Shares in the S&P/ASX 200 Index (ASX: XJO) health imaging company closed yesterday trading for $303.20. In late morning trade on Wednesday, shares are changing hands for $299.69 apiece, down 1.2%.
For some context, the ASX 200 is down 0.3% at this same time.
Today's underperformance is far from the long-term norm for Pro Medicus shares, which are up 129% since this time last year. That's almost 10 times the 13% gains posted by the ASX 200 over this same time.
Of course, those outsized gains have come and gone by now.
The question today is, is the stock a good buy ahead of tomorrow's release of the full-year FY 2025 earnings results?
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Should you buy Pro Medicus shares today?
Shaw and Partners' Jed Richards recently ran his slide rule over the ASX 200 healthcare company (courtesy of The Bull).
"The company provides medical imaging software and services to hospitals and healthcare groups across the world," said Richards, who has a sell recommendation on Pro Medicus shares.
"The shares have risen from $176.88 on April 7 to trade at $320.26 on August 7," he noted. "Pro Medicus trades at extremely high valuation multiples and has no dividend yield."
The company paid out a total of 47 cents a share in fully franked dividends over the past 12 months. That equates to a very slender 0.16% trailing dividend yield.
And Richards cautioned that Pro Medicus shares could come under heavy selling pressure if the company fails to meet the market's lofty growth expectations.
He said:
While its medical imaging software is innovative, the stock price reflects aggressive growth assumptions. Any slowdown in earnings or margin pressure could trigger a sharp correction. Compared to peers, PME appears overvalued and lacks income support.
Connecting the dots, Richards concluded, "Investors may want to consider locking in gains and re-allocating funds to more reasonably priced healthcare or technology names with better risk-reward profiles."
What did the ASX 200 stock report for the first half of FY 2025?
Pro Medicus shares were last in the spotlight on 13 February when the company released its half-year results (H1 FY 2025).
Pro Medicus achieved some impressive growth over the six-month period, with total revenue up 32.2% to a record $100.8 million.
On the bottom line, net profit was up 42.7% year on year, also hitting a new record of $51.7 million.
Pro Medicus CEO Sam Hupert offered an optimistic outlook on the day, saying, "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."
