Pro Medicus Ltd (ASX: PME) shares have been caught up in the brutal sell-off that has swept through AI-exposed software-as-a-service stocks.
Concerns that rapid advances in artificial intelligence could make existing software platforms redundant have weighed heavily on sentiment, and the high-quality healthcare technology company has not been spared.
As a result, Pro Medicus shares have fallen more than 40% over the past 12 months and last traded at $164.93.
While this is disappointing, could it have created an incredible buying opportunity? Let's see if Bell Potter thinks this stock could surge over the remainder of 2026.
A high-quality Australian stock
Bell Potter has long been positive on Pro Medicus and believes it stands out as one of the highest-quality businesses on the Australian share market. The broker said:
Pro Medicus is among the highest quality companies on the ASX. CY25 was yet another banner year with 10 major contract announcements, totalling minimum revenues of $445m.
These contract wins matter. Pro Medicus sells enterprise-scale radiology software into major hospital networks, and contracts are typically long-term, sticky, and difficult for competitors to displace once embedded.
Strong earnings growth expected
Despite its already significant scale, Bell Potter believes Pro Medicus still has a long runway for growth ahead. The broker expects earnings growth to remain exceptionally strong over the next two years. It said:
We expect EPS growth of 36% in FY26 followed by 30% in FY27. The company continues to announce new contract wins on a regular basis as the drivers of interest in its product offering remain firmly in place.
Structural tailwinds in radiology
One reason Bell Potter remains confident is the broader structural shift underway in the global radiology industry. The broker notes that "the entire radiology industry is headed to cloud based (off premises) archiving."
That transition plays directly into Pro Medicus' strengths. Its Visage platform is designed for speed, scale, and performance, critical requirements as imaging datasets become larger and more complex. Bell Potter explains:
Put simply, the Visage 7 viewer, Workflow and Archive are the fastest and most advanced tools for the retrieval and viewing of large radiology files. The platform is immensely scalable and relatively easily installed, providing it with a sustainable competitive advantage over the likes of peers Intelerad, Sectra, Philips and GE Healthcare.
Are Pro Medicus shares ready to surge?
Bell Potter currently has a buy rating and a $320.00 price target on the Australian stock.
Based on its latest share price of $164.93, this implies almost 95% upside over the next 12 months.
