If you're wanting exposure to the tech sector, then it could be worth considering Pro Medicus Limited (ASX: PME).
That's the view of analysts at Goldman Sachs, which see plenty of upside for the ASX 200 tech share.
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What is Goldman saying about this ASX 200 tech share?
According to the note, the broker was pleased with Pro Medicus' performance in FY 2023. It notes that the company's "revenue growth of +34% came in +3% ahead of consensus, driven by the key recurrent CF stream (transaction revenue +44%)."
The good news is that Goldman believes that there's more of the same coming in the new financial year. It adds:
Forward commentary/guidance was characteristically limited, but we believe the FY24 revenue profile is largely de-risked due to the full-year consolidation impact from Novant, Inova and Allina, in addition to the implementation of new contracts announced through the last 12m.
But if you thought its growth would end then, think again. Its analysts "now forecast revenue growth of +26% in FY24 and a +19% CAGR from FY23-26E."
In light of this positive growth outlook, the broker believes that the company's shares are good value at current levels. It explains:
On our estimates, PME currently trades on 65x NTM EV/EBITDA (noting we are +8-9% above EBITDA consensus in FY24/25E). Whilst the stock does not look cheap on near-term multiples: i) the business is highly profitable (>50% net margins); ii) cash flows are recurrent/long-dated in nature (5/7-year contracts); and iii) the balance sheet is robust ($121.5m net cash).
Valuation
The note reveals that Goldman has responded to the result by retaining its buy rating with an improved price target of $80 (from $76).
Based on the current Pro Medicus share price of $70.10, this implies a 14% upside for this ASX 200 tech share over the next 12 months.
