Bell Potter analysts upgrade Pro Medicus on new contracts
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The news: Bell Potter analysts have upgraded Pro Medicus from 'sell' to 'hold' following its announcement of acquiring five new North American clients worth a combined $45 million.
The numbers: The analysts also hiked their price target on the company to $115 from $75.
Pro Medicus shares climbed 2.81% to $123.44 by 1:19pm AEST, building on a steady 107.99% increase over the past 12 months. The soaring prices have pushed Pro Medicus’ market cap above $12 billion.
The contracts, signed by its wholly owned US subsidiary Visage Imaging, add $45 million in revenue over the next eight years, with $4 million in new recurring revenue and $4 million in up-front fees.
Bell Potter analysts estimate the new contracts firm up projections for Pro Medicus’ FY25 revenue at around $200 million — a 25% revenue increase from FY24.
The context: Bell Potter noted that prior to the new clients, the company had not announced any new contracts for six months. They said the new contracts provide a clearer revenue base for what is now one of the ASX’s most expensive stocks. Its earnings valuation to revenue multiple was more expensive at 58x compared to companies such as Nvidia (22x) and Apple (7.3x), they said.
Bell Potter analysts said the cloud-based technology deployments will take six months to get up and running, pushing revenue into FY25.
The company first entered the US market in 2013 and now provides health imaging technologies worldwide. In February, Visage Imaging launched a diagnostic imaging app for Apple Vision Pro, Apple's spatial computing platform.
The source: Bell Potter research
