Bell Potter downgrades Pro Medicus after latest share price surge
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The news: Bell Potter has downgraded its rating on medical imaging company Pro Medicus on valuation grounds, after the company's shares rocketed on Thursday following the announcement of two new US contracts worth a combined $190 million.
The numbers: The investment house cut its recommendation on Pro Medicus from 'buy' to 'hold' but bumped up its 12-month target price from $280 to $320.
Pro Medicus shares jumped 7.8% to close $307.39 on Thursday, taking annual returns to nearly 140%.
The context: Bell Potter analyst John Hester said Pro Medicus' new deals show the drivers of the uptake of its Visage system "remain firmly in place".
The company's flagship product is an imaging platform used for viewing, managing, and distributing medical images.
Hester said that swift deployment, radiologist shortages, upload speed and "sensational visualisation" were the product's key selling elements.
He expects strong earnings growth in the medium term, sustaining the current share price, but downgraded the stock on valuation grounds.
The source: Bell Potter research
