It is a fantastic company with 50% of revenue going into the bottom line, and the revenue is growing strongly. But is currently trading at ~150x revenue. What does this mean? Given that it has 9% market share, and if it achieves the improbable and absolute dominance of this market at a 90% market share, its revenue will go up by 10x. At that point, the investor is left with a very profitable, but barely growing business at 2-3% pa. Assume at that point 70% of revenue becomes the bottom line, which is the maximum possible, then the PE will be 150x/10/0.7=21.4, which is about right for a very profitable but slow growing business in a relatively low interest rate environment. At its growth rate of ~30%pa, it takes about 8 years to grow 10x. So given today's price implies a PE of ~21 in 8 years under the most optimistic assumptions, the investor will get nothing for 8 years.
This simple math illustrates how a most excellent business can become absurdly valued. If the investor wants to get 10%pa for his risk for sitting 8 years on it, then under the best assumptions the share price must more than halve today to deliver the 10% return for the next 8 years. Anything less optimistic than the above assumptions will decimate the share price in those intervening 8 years despite the company being a fantastic business.
This is just some rational illustrations for this super-expensive stock. Don't take this as a given. I am not an advisor. Do your own analysis of the future scenarios and draw your own conclusions. I have followed this stock since its listing. It was one of the great success stories in the health technology space. I am only highlighting the current valuation issue. Other than that, I absolutely admire the company's management for building this incredible business.
- Forums
- ASX - By Stock
- Ann: HY25 Results Presentation
PME
pro medicus limited
Add to My Watchlist
0.76%
!
$327.98

It is a fantastic company with 50% of revenue going into the...
Featured News
Add to My Watchlist
What is My Watchlist?
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
|
|||||
Last
$327.98 |
Change
-2.500(0.76%) |
Mkt cap ! $34.26B |
Open | High | Low | Value | Volume |
$325.25 | $332.42 | $325.10 | $53.80M | 163.7K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
2 | 10 | $327.00 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$327.98 | 1708 | 1 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 1 | 327.000 |
1 | 92 | 326.680 |
1 | 100 | 326.560 |
1 | 79 | 326.550 |
3 | 925 | 326.000 |
Price($) | Vol. | No. |
---|---|---|
331.800 | 16 | 1 |
331.980 | 75 | 1 |
332.300 | 300 | 1 |
333.000 | 15 | 1 |
333.570 | 8 | 1 |
Last trade - 16.10pm 18/07/2025 (20 minute delay) ? |
Featured News
PME (ASX) Chart |