Treasure Chest | Nov 12 2025
This story features PRO MEDICUS LIMITED.
For more info SHARE ANALYSIS: PME
The company is included in ASX50, ASX100, ASX200, ASX300, ALL-ORDS and ALL-TECH
FNArena's Treasure Chest reports on money making ideas from stockbrokers and other experts. Today's idea is Pro Medicus.
- Brokers reassess Pro Medicus after share price correction
- Quiet period offsets long-term growth momentum and contract wins
- AI, cloud certification, and flagship deployments strengthen outlook
By Danielle Ecuyer
FNArena’s Treasure Chest reports on money making ideas from stockbrokers and other experts.
Whose Idea Is It?
Bell Potter
The subject:
Pro Medicus ((PME))
A traditionally quieter period for new contract wins has collided with a souring of sentiment around higher valuation quality companies including Pro Medicus.
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Sentiment and profit-taking are as much a part of the suite of investing variables that can impact share prices as are fundamentals.
Pro Medicus, along with a suite of other high-profile ‘expensive’ (i.e. high valuation price-to-earnings multiples) stocks, has been in the proverbial dog’s box since mid-July when the share price touched an all-time high of $336.
Brokers reassess Pro Medicus after share price correction
Morgans represents one such broker that called out a Trim rating post the FY25 results due to an absence of new and substantial news flow at the time.
Since then, it has been one-way selling pressure, with the med-tech darling falling over -25%, enough for Bell Potter on Wednesday (today) to raise the upgrade flag to Buy from Hold.
Morgans had already joined Citi’s upgrade to Buy from Sell in mid-September with an upgrade to Hold from Trim in mid-October, citing the sell-off and volatility in growth names as part of the reason for share price pressure.
As articulated today by Bell Potter, the analyst urges investors to look through what is traditionally a “quieter period” for the company in terms of new contract wins and market-moving news to what lies ahead.
One announcement was made for the same period at the start of FY25, with six new contract announcements that ensued in the rest of the same financial year.
The first four months of a new fiscal year can be quieter, and FY26 is proving no different.
Since August, several installations have been completed, including the first and largest part of the Trinity contract, which went live recently.
Lucid Health went live in September, as well as the upgrade to Franciscan Missionaries of Our Lady Health System, a 5-year renewal and expansion agreement with a minimum value of $20m.
Bell Potter is quick to point out the Trinity ‘Go-Live’ was the biggest single large-scale multi-year enterprise contract in recent history, with the second and third cohorts of the contract expected in the mid to latter part of 2026.
Once fully implemented, the Bell Potter analyst estimates around $30m in annual recurring revenue to be added while adding another major site as well as substantial scope across Trinity’s integrated network of hospitals, outpatient facilities, and clinics.
Positive news comes in different shapes and sizes
In another validation of the company’s quality and utility, Morgans pointed to the Authority to Operate from the US Department of Veterans Affairs for the company’s Visage 7 CloudPACS platform within the Veterans Affairs enterprise cloud.
The authority permits the transition of existing deployments from on-premise to the cloud and validates the company as a “trusted partner” for the migration of federal healthcare to the cloud, the analyst emphasises.
While no contract was awarded, certification confirms management’s quality and ability to meet the federal standards of scrutiny and security and is a good reference case to secure additional Veterans Affairs region contracts to the cloud and pipeline.
On October 8, the first major EU contract in recent history was announced; a $10m enterprise contract over five years with University Hospital Heidelberg, Germany’s largest biomedical research institution.
Europe remains another large market for Pro Medicus, with this the first ex-US contract since 2020.
Multiple strong moat-like characteristics underpin growth
Citi may have been a bit early to upgrade the stock to Buy from Sell in mid-September, but the new analyst at the time stressed the importance of the compounding effects of long-term contracts, often up to a decade long, on top of what were described as “sticky customers.”
Forecasts of revenue growth of 20% beyond five years are possible due to these characteristics, as well as an ongoing need for healthcare institutions to raise efficiency against a backdrop of radiologist shortages. Citi upgraded revenue growth estimates in five years to the mid-high 20% range, which in turn has a material impact on the valuation of the stock.
The potential impact of AI on the company is probably another factor weighing on sentiment and the stock. For Citi, artificial intelligence is a friend, not a foe.
Management announced a licensing agreement to commercialise a breast cancer detection algorithm it co-developed. Pro Medicus is positioning itself as a platform on which third-party AI solution creators can integrate.
It’s a mutual win-win whereby the creators have potential access to clients and Pro Medicus can achieve further functionality.
Risk off sentiment opens up longer term opportunities
None of the brokers shy away from the high valuation multiple ascribed to the stock, with Citi suggesting if Pro Medicus can grow revenue as expected, the valuation is plausible. With an upgraded target of $350 from $220, the stock has since retraced a further -10% plus since it was upgraded to Buy.
Morgans sees the company as one of the highest-quality businesses on the ASX, listing a suite of moat-like characteristics in support, including strong margins, a long-term contracted revenue base, and significant baseline earnings transparency.
Morgans’ target price was upgraded to $290 from $285.
Bell Potter also stresses the high earnings visibility, with around 90% of forecast revenues generated from recurring exam and baseline revenues (largely from Australia), all subject to long-term contracts and/or minimum volumes at fixed rates.
The upcoming Radiological Society of North America, the world’s largest annual medical imaging conference held in Chicago in late November, is considered a major selling event and a potential catalyst for sentiment and earnings contracts.
Bell Potter anticipates high-profile renewals from names such as the Mayo Clinic and Yale New Haven over the next one to two years.
Bell Potter’s target price remains at $320 with an upgrade to Buy from Hold, with the restart of the share buyback highlighted as yet another positive.
FNArena’s daily monitored brokers consensus price stands at $322.767 with three Buy-equivalent alongside three Hold-equivalent ratings.
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