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

Let's take a look.

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

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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.

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