Pro Medicus (ASX:PME): How US Contract Momentum Shapes Its Current Valuation

Pro Medicus (ASX:PME) has made headlines by clinching three major US hospital contracts in just four months. This achievement has already tripled its contract win rate from last year and sparked fresh curiosity among investors.

See our latest analysis for Pro Medicus.

Despite some recent share price volatility, including a 10.98% dip over the past month, Pro Medicus is still up 24.96% on a total shareholder return basis for the past year and has delivered a remarkable 336% over three years. News of major new US contracts and anticipation around the RSNA conference have helped boost sentiment, supporting the view that the company's long-term growth story remains intact.

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With shares pulling back even as contract momentum builds and analysts issuing fresh upgrades, the question now is whether Pro Medicus represents genuine value at today’s levels or if the market is already pricing in the next wave of growth.

Most Popular Narrative: 91% Overvalued

Pro Medicus's most tracked narrative values the company at less than half its last close. This striking gap with the traded price highlights how lofty growth expectations are fueling one of the market's highest valuations.

Pro Medicus is a high-quality and well-managed business, but it does not operate in a monopoly. Major global players like GE Healthcare, Philips, and Siemens offer competing products and are actively developing platforms to emulate Visage’s capabilities. These companies also benefit from broader product portfolios, which help fund their R&D at scale. PME also faces some concentration risk, with revenue heavily reliant on a relatively small number of customers. Its lack of diversification beyond medical imaging means it is particularly exposed to regulatory and technological shifts, as well as changes in healthcare and insurance policy, especially with recent developments in the U.S. market.

Read the complete narrative.

Want to know how one bold profit margin and future earnings multiple pushes this valuation sky-high? The model makes some audacious assumptions about growth and business quality. Only a deep dive reveals the numbers driving this narrative.

Result: Fair Value of $133.68 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, fresh competition or a sudden regulatory change could undermine Pro Medicus’s current growth trajectory and put pressure on its lofty valuation.

Find out about the key risks to this Pro Medicus narrative.

Build Your Own Pro Medicus Narrative

If you prefer your own perspective or want to examine the details yourself, you can craft your own view of Pro Medicus in just a few minutes: Do it your way

A great starting point for your Pro Medicus research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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