Pro Medicus Ltd (ASX: PME) and Telstra Group Ltd (ASX: TLS) shares are popular options for Aussie investors.
But are they in the buy zone following their respective results releases last week? Let's see what Bell Potter is saying about them.
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Pro Medicus shares
Bell Potter was pleased with Pro Medicus' strong full year result, noting that it was ahead of expectations. It said:
PME reported FY25 revenue and EBIT growth of 32% and 40% respectively with the result at EBIT modestly ahead (1%) of consensus earnings. The resumption of top line growth >30% is a key indicator of demand along with the 430bps margin expansion at EBIT. The ongoing top line growth and earnings leverage continue to drive the share price. The business continues to be highly scalable and this is unlikely to change in the foreseeable future.
And with its rivals showing no signs of innovation, Bell Potter thinks Pro Medicus is well-placed to continue its market share growth. It adds:
The company is seeing no investment in innovation by competitors to address the fundamental issue of speed of file transfer, hence, we believe the price leadership established by PME in the core business is set to continue. Competitors remain constrained by traditional compress and send technology with no apparent motivation to rein in PME's market share growth.
However, due to valuation reasons, Bell Potter only has a hold rating and $320.00 price target on its shares. This compares to its current share price of $313.50.
Telstra shares
Bell Potter was also pleased with this telco giant's full year result, with its underlying earnings coming in largely in line with expectations. It said:
FY25 underlying EBITDA of $8,621m was close to in line with our forecast of $8,611m and in the middle of the $8.5-8.7bn guidance range. Positive highlight of the result was the free cash flow after leases before strategic investment of $3,433m which was 2% above our forecast of $3,376m and above the top end of the $3.2-3.4bn guidance range. The final dividend of 9.5c fully franked was in line with our forecast.
It was also pleased to see that its guidance for FY 2026 was consistent with its expectations.
However, it hasn't seen enough to make a change to its recommendation and continues to rate Telstra's shares as a hold with a $4.75 price target (from $4.65). This is a touch lower than where it currently trades. The broker concludes:
We have increased the multiple we apply in the PE ratio valuation from 23x to 24x and also the multiple we apply to the Mobile business in the sum-of-the-parts from 7.5x to 8x. We have also rolled forward the DCF and DDM by a year given we are now in FY26 but there is no change in the WACC we apply of 8.9%. The net result is a 2% increase in our PT to $4.75 which is a modest discount to the share price so we maintain the HOLD recommendation.
