Over the past month ASX 200 company Pro Medicus Ltd (ASX: PME) has come under significant pressure, with the share price falling 15% to $248.83 at the time of writing.
Despite the turbulence, the share price is still 18% up in the last 12 months, but it's a far cry from its peak of $336 in July.
Sweetheart of the ASX
Pro Medicus is a health-technology company that develops imaging software used by hospitals, radiology networks and large health systems around the world, especially in the US.
The ASX 200 tech-company has been one of the ASX sweethearts of the past two years, and it firmly sits inside the top 50 companies listed on the ASX in terms of market cap.
Ultra-fast key-product
Its flagship product is Visage 7, an ultra-fast cloud based medical imaging platform. It has been winning Pro Medicus big hospital contracts around the world and especially in the US.
The Visage 7 is regarded as one of the fastest and most efficient viewers globally. It enables radiologists to open massive MRI- and CT-scans in seconds, even remotely. Contracts with prestigious hospitals such as Mayo Clinic, NYU Langone and UC San Diego have turned the US into the biggest market for Pro Medicus.
Fundamentals remain strong
Despite the declining share price, many of Pro Medicus' fundamentals remain strong. The financial results for FY25 were positive and the profit margins are some of the highest on the ASX. The ASX 200 company has a steady revenue stream due to long term contracts with hospitals, and the cash position is also very healthy.
The recent pullback could suggest that some investors are locking in their gains or reassessing their risk. One of the biggest concerns is Pro Medicus's very high price-to-earnings (PE) ratio. This means that the stock is priced for very strong future growth. If results fall below expectations, Pro Medicus will pay the price on the ASX.
What do analysts think?
Most brokers remain positive and recommend Pro Medicus as a hold or buy. Analysts of Bell Potter just upgraded their recommendation to a buy rating, with a $320.00 price target.
Based on its current share price, this implies potential upside of 29% for investors over the next 12 months.
Commenting on its upgrade, the broker said:
With earnings transparency remaining high, we attribute the recent sell off to profit taking following the string of new contract wins and record earnings in FY25. Consensus EPS is for FY26 is ~152cps representing ~38% growth. While PME remains expensive relative to peers, it is now trading 25% below its all-time high (achieved in July 2025). Catalysts include the RSNA trade show in late November which represents the major selling event of the year. In addition, we expect high profile renewals over the next 1 – 2 years from the likes of Yale New Haven and Mayo clinic.
