Pro Medicus Ltd (ASX: PME) shares could be dirt cheap right now.
That's the view of analysts at Bell Potter, who are urging investors to buy the health imaging technology company's shares while they are down.
Image source: Getty Images
What is the broker saying?
Bell Potter was pleased with news that Northwestern Medicine has renewed with the ASX 200 tech stock for a further five years on improved terms. It said:
Northwestern Medicine has signed a 5 year extension with PME for the Visage Viewer at increased rates and with an increased minimum deal value. Northwestern is one of the largest healthcare providers in the state of Illinois and a leading academic medical centre and remains a highly valuable client. Contract value is upgraded from $22m to $37m over five years.
PME continues to win new business in the United States, last week announcing the signing of a five year $23m deal with University of Maryland Medical System covering Visage 7 Viewer and Visage Workflow – but again no archive (Maryland already has an off premises archive). We understand the incumbent was Carestream (a company owned by Phillips).
Outside this, Bell Potter has trimmed its revenue forecast slightly to reflect a delay in revenues from the major Trinity Health contract and a weaker US dollar. It adds:
FY26 revenue forecast is reduced by a further 3.4% to $261m owing to amendments in the commencement date for exam revenues on major new contract implementations at Trinity Health and U. Colorado. The weaker US$ is also expected to have a material impact on revenues in the current period.
Longer term, the outlook remains strong with PME FY27 exam revenues expected to benefit from full period benefit of implementations in the current half including the two largest cohorts of the Trinity Health contract plus the Big Bang implementation at U. Colorado covering radiology and cardiology.
Time to buy this ASX 200 tech stock?
According to the note, the broker has retained its buy rating on the ASX 200 tech stock with a slightly reduced price target of $226.00 (from $240.00).
Based on its current share price of $132.38, this implies potential upside of 70% for investors over the next 12 months.
Commenting on its buy recommendation, Bell Potter said:
PME continues to win new work and retains 100% of its existing client base. The stock is trading 60% below it all time high – not all attributable to the re-rating of its software revenues stream i.e. the law of large numbers is catching up, hence harder now for the company to maintain +30% EPS growth. Retain buy, PT amended to $226 following earnings amendments.
