Morningstar labels Pro Medicus as 'overvalued'
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More news: Pro Medicus shares edged lower after it announced a $33 million contract with the University of Kentucky and as Morningstar analysts described the stock as overvalued.
Its shares were down 0.25% to $253.06 but have rocketed 163% over the past 12 months.
Morningstar analyst Shane Ponraj raised his fair value estimate on the company by 2% to $46, mostly due to a strengthening US dollar.
Ponraj noted that he expected further contract wins to underpin earnings growth. However, he said that while Visage 7 resonated most with US academic hospitals and large healthcare systems that had greater interest in advanced visualisation, the company’s management believed that even some top hospitals did not require the best technology in the market.
What they said: “Pro Medicus remains materially overvalued, with a lot of good news baked in. Shares currently trade over 170 times our forecast fiscal 2026 earnings per share,” Ponraj said.
“While some smaller radiology groups are willing to pay a premium for Visage 7, we still anticipate wider uptake to be slow.
“... We also expect downward pressure on the average size of future contracts as the more lucrative academic hospitals market inches closer to saturation.
Pro Medicus signs $33m deal with University of Kentucky
The news: Medical imaging provider Pro Medicus has signed a long-term deal with the University of Kentucky to roll out its Visage products, as part of an expansion into North American academic institutions.
The numbers: The nine-year contract, signed by US subsidiary Visage Imaging, is worth $33 million, the company said.
Pro Medicus shares, which have more than doubled over the past 12 months, are up 2.5% to $260 in early trading on the ASX.
The context: The transactional licensing contract will see Pro Medicus’ cloud-based Visage 7 Enterprise Imaging Platform, deployed across the university’s network to provide a unified diagnostic imaging platform. The system is targeted to go live in the second quarter of 2025.
Late last year, Pro Medicus signed similar deals with Duke University, Trinity Health, and medical group Duly Health in the US.
The Melbourne-based group provides medical imaging software and services to hospitals, imaging centres and healthcare groups globally.
What they said: “Our pipeline remains strong and spans all market segments. As has been the case with many of our recent contracts, this deal is for our full stack comprising all three Visage products, a trend we see continuing,” chief executive Dr Sam Hupert said.
The sources: ASX announcement, Morningstar research
