The Pro Medicus Ltd (ASX: PME) share price enjoyed another strong day of outperformance on Wednesday.
Shares in the S&P/ASX 200 Index (ASX: XJO) health imaging company closed yesterday at $247.18 apiece, up 1.17%.
For some context, the ASX 200 closed down 0.47% yesterday.
As you can see on the chart below, the stock has been on an absolute tear over the past year.
One year ago, you could have snapped up Pro Medicus for $90.61 a share. At yesterday's close, that sees the ASX healthcare stock up a whopping 172.8%.
Or enough to turn a $5,000 investment into $13,640.
In 12 months.
And that doesn't include the 40 cents a share in fully franked dividends eligible investors will have received over this time.
But with the stock now trading at a price-to-earnings (P/E) ratio of around 300 times, has Pro Medicus stock soared too high too fast?
Image source: Getty Images
Time to take some profits?
Commenting on the ASX 200 healthcare stock on The Bull, Morgans' Damien Nguyen noted, "This health imaging company recently announced a significant contract win with Trinity Health, one of the largest not-for-profit health care systems in the US."
As for the soaring Pro Medicus share price, he added:
The 10-year contract with Trinity is worth $330 million. Investors responded to the news by sending the share price above $250 for the first time. The shares have risen from $96.30 on January 2 to trade at $264.17 on December 5.
While Nguyen sounded a positive note on the company, he expressed concerns over its current valuation.
According to Nguyen:
While we view PME as one of the best quality growth companies on the ASX, it's trading at a multiple with a lot of future growth and contract wins already priced in.
We think it's prudent to trim exposures here and consider undervalued opportunities.
Pro Medicus share price target doubled
Not all analysts are worried about the big gains achieved by the Pro Medicus share price.
Last week, Bell Potter doubled its price target on the stock from $130 to $260 a share, following the company's $330 million contract win with Trinity.
"We have previously under appreciated the value accretion in contract upgrades… Contract wins are likely to continue," the broker said.
Commenting on the Trinity deal on 28 November, the company's biggest-ever contract win, Pro Medicus CEO Sam Hupert said:
Trinity Health is our largest customer to date and the first with a national footprint. Our initiative with Trinity Health is noteworthy for its scope and scale which will see the Visage 7 platform used by over 650 Radiologists and thousands of clinicians…
Our pipeline remains strong and spans all market segments.
The Pro Medicus share price closed up 8.7% on the day.
