A stock I’m bullish on is Pro Medicus Limited (ASX: PME), an Australian healthcare technology company that develops medical imaging software

What do I think the business will look like in 5 years time, and why?

I believe Pro Medicus will still be focused on providing medical imaging software and radiology workflow solutions to large hospitals and healthcare networks. Its main product, the Visage imaging platform, helps doctors view and analyze medical scans faster and more efficiently.

In 5 years, I expect the company to have more hospital contracts in the United States, which is currently its largest growth opportunity. The US healthcare system is very large and hospitals are gradually upgrading their imaging systems to cloud-based platforms.

Pro Medicus has a strong competitive advantage because its software is known for speed and reliability, which are critical in medical imaging where doctors need to analyze large scan files quickly. The company also tends to sign long-term contracts with hospitals, which creates recurring revenue and high switching costs.

I believe the company will continue expanding internationally, particularly in the US and Europe, while maintaining its reputation as a premium medical imaging platform.

What do I think the business’ revenue and earnings will be in 5 years time, and why?

Over the past decade, Pro Medicus has grown revenue and profits significantly due to winning large hospital contracts.

In 5 years, I expect:

• Revenue to roughly double due to additional hospital contracts, particularly in the US.
• Earnings to grow even faster than revenue because the company’s software business has very high margins and low incremental costs once contracts are secured.

Because most of its costs are fixed (software development), each additional contract improves profitability. As a result, I expect Pro Medicus to maintain very strong profit margins and high return on equity.

Do I agree with the current growth rate expectations from analysts?

Analysts generally expect strong but moderating growth as the company becomes larger.

I mostly agree with these expectations because:

• The healthcare imaging market is still growing.
• Hospitals continue transitioning toward cloud-based imaging systems.
• Pro Medicus has already proven its ability to win large contracts.

However, growth may slow slightly compared to the past because the company is now much larger.

If not, what do I think the growth rate should be?

I believe revenue growth could remain high double-digit (around 15–20% annually) over the next several years.

This is because:

• The US market is extremely large and still underpenetrated.
• Healthcare technology adoption continues to increase.
• Pro Medicus has a strong reputation and proven product.

Based on my growth expectations, is the stock currently overvalued or undervalued?

Pro Medicus is often considered expensive based on traditional valuation metrics, because investors expect strong future growth.

However, if the company continues winning large hospital contracts and maintaining high margins, I believe the current valuation could still be justified.

My approach would be to wait for market pullbacks or periods where the stock trades closer to its fair value before buying, rather than purchasing at any price.