Fundie reveals why the Pro Medicus (ASX:PME) share price is still a buy

Fund manager Ben Griffiths from Eley Griffiths Group thinks that the Pro Medicus Ltd (ASX:PME) share price is still a buy.
The post Fundie reveals why the Pro Medicus (ASX:PME) share price is still a buy appeared first on The Motley Fool Australia. –

medical asx share price represented by doctor looking up at question marks

The Pro Medicus Ltd (ASX: PME) share price is still a buy according to fund manager Ben Griffiths from the funds management business Eley Griffiths Group.

Why Eley Griffiths is worth listening to

Eley Griffiths runs two funds, The Small Companies Fund and The Emerging Companies Funds.

The Small Companies Fund targets businesses outside of the S&P/ASX 100 Index (ASX: XTO). After fees, it has outperformed the S&P/ASX Small Ord Accumulation Index by an average of 4.2% per annum since inception in September 2003.

What’s Pro Medicus?

It’s a business that is a health imaging technology provider, predominately in the radiology software and services space for hospitals, imaging centres and health care groups worldwide. It offers an end-to-end offering with its Visage technology.

Fund manager Ben Griffiths explained on Livewire Markets that radiologists and other medical imaging professionals use Visage to interpret images created by medical imaging equipment such as X-Ray, Ultrasound, CT and MRI Scanners.

Why does Eley Griffiths think that the Pro Medicus share price is an opportunity?

The fund manager said that its research shows that Pro Medicus is significantly ahead of its peers when it comes to viewer speed and efficiency for clinics.

One of the highlights for Mr Griffiths is that the healthcare ASX share has been winning contracts worth $155 million in the financial year to date. This has been much stronger than FY19 and FY20 where the wins amounted to around $50 million per annum in those years.

Since 31 December, Pro Medicus has won some very big contracts. One is a 7-year, $40 million contract with US-based Intermountain Healthcare, which operates in the mountain states of Utah, Idaho and Nevada. It also won a 7-year, $31 million contract with a leading Californian academic health system.

The valuation of Pro Medicus is high, according to Eley Griffiths.

However, it’s expected to have 20% compound revenue growth over the next five years. Mr Griffiths noted that Pro Medicus could have earnings before interest and tax (EBIT) margins of around 60% – he said it’s in “rarefied air”.

One of the other things that the fund manager noted was that Pro Medius has a very high return on invested capital (ROIC) compared to most other ASX shares.

Eley Griffiths is particularly excited by the fact Pro Medicus has plenty of ways that it can invest its capital whilst it wins more market share and attract more customers with an even stronger software offering.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Pro Medicus Ltd. The Motley Fool Australia has recommended Pro Medicus Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Fundie reveals why the Pro Medicus (ASX:PME) share price is still a buy appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!