Doubled in a year! Does this booming ASX share have another 24% upside?

Let's take a look.

| More on:
One girl leapfrogs over her friend's back.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Pro Medicus Ltd (ASX: PME) share price has been an incredible performer for shareholders in the past 12 months, up 134%!

Created with Highcharts 11.4.3Pro Medicus PriceZoom1M3M6MYTD1Y5Y10YALL18 Nov 202318 Nov 2024Zoom ▾Jan '24Mar '24May '24Jul '24Sep '24Nov '24Jan '24Jan '24Apr '24Apr '24Jul '24Jul '24Oct '24Oct '24www.fool.com.au

The impressive business has seen its earnings rise, and the price-earnings (P/E) ratio has continued to climb.

How far could the healthcare tech company rise?

One broker thinks there's still plenty of room left in the business' valuation for further gains in the next year. The ASX share is certainly delivering enough earnings growth to excite investors.

Price target on Pro Medicus shares

Broker analysts regularly scan the market for opportunities, and they'll use a price target to indicate whether they think a business is overvalued or undervalued.

A price target is where the analysts think the share price will be in 12 months following the investment call. Of course, they don't have crystal balls. They're giving their rating based on the company's operational progress, wider economic conditions and so on.

The broker Wilsons is very optimistic on where Pro Medicus shares can go from here. Wilsons recently decided to crank up its price target on Pro Medicus shares by 76% to $255. That implies the Pro Medicus share price could rise by a further 24%.

Unsurprisingly, Wilsons has an overweight rating on Pro Medicus, which means it's optimistic about the ASX healthcare company.

Why is the ASX healthcare share doing so well?

The company has reported a number of positives in the last few months and the last few years.

Its financial performance has been utterly impressive, with the latest result showing the strength of its business model.

In the FY24 result for the 12 months to 30 June 2024, Pro Medicus reported revenue growth of 29.3% to $161.5 million, underlying operating profit (EBIT) of $112.3 million, up 33.8%, and net profit after tax (NPAT) growth of 36.5% to $82.8 million. This helped fund a 33.3% increase in the final dividend to 22 cents per share.

Incredibly, the EBIT margin was 69.5% in FY24, making it one of the most profitable operating companies in Australia.

While Pro Medicus has been successful at winning new clients, a recent contract renewal was particularly pleasing. It revealed an eight-year contract renewal with US-based Mercy Health for a minimum value of A$98 million.

The Mercy Health contract was renewed at an increased per transaction fee, for a longer term. This vote of confidence in Pro Medicus bodes well for its other large existing contracts and implies it could win more revenue from its customer base as contracts are renewed.

With the high profit margins of the ASX share and the ongoing revenue growth, the future looks very bright.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Healthcare Shares

three excited doctors with hands in the air
Healthcare Shares

Two ASX healthcare shares that could be set to double

This broker has buy recommendations on these two shares. 

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Healthcare Shares

Telix shares jump 7% on big US news

Let's see what is getting investors excited on Wednesday.

Read more »

An older gentleman leans over his partner's shoulder as she looks at a tablet device while seated at a table.
Healthcare Shares

Macquarie tips 28% upside for this ASX healthcare stock

The broker expects big things from this New Zealand retirement village developer and operator.

Read more »

Teamwork, planning and meeting with doctors and laptop for medical, review and healthcare. Medicine, technology and internet with group of people for collaboration, diversity and support in hospital
Healthcare Shares

$10,000 invested in these ASX healthcare shares 5 years ago is now worth…

These healthcare stocks have brought big returns for investors 

Read more »

A man wearing a white coat and glasses is wide-mouthed in surprise.
Healthcare Shares

Guess which ASX 300 stock is crashing 55% today

What's going on with this stock? Let's see why investors are hitting the sell button.

Read more »

Woman serving customer in pharmacy.
Healthcare Shares

Up 132% in a year, are Sigma Healthcare shares still a good buy post the Chemist Warehouse merger?

After gaining 132% in 12 months, it too late to buy Sigma Healthcare shares today?

Read more »

Three scientists wearing white coats and blue gloves dance together in a lab.
Share Market News

Is it too late to buy Pro Medicus shares?

Pro Medicus shares have risen 550% over 3 years. Have you missed the boat? Three experts weigh in.

Read more »

Researchers and doctors with futuristic 3d hologram overlay for body anatomy or dna in hospital clinic.
Healthcare Shares

These 5 ASX 200 healthcare shares gained the most weight in FY25

These stocks were in great health last financial year.

Read more »