On Thursday, JPMorgan revised its rating for Pro Medicus Ltd. (PME:AU) (OTC: PMCUF) stock, shifting from Overweight to Neutral. The firm, however, raised its price target for the company to AUD130.00, up from the previous AUD104.00. The adjustment comes even as Pro Medicus reports a year of exceptional performance, including a record number of new customers and implementations.
According to JPMorgan, Pro Medicus has made significant strides in the US market, but its current market share remains at approximately 7%. The analyst noted that while the company's competitors struggle to match its offerings, Pro Medicus will need to secure larger clients to sustain its recent growth rate, as its installed base grows. The firm's market share is projected to double to around 15% by the fiscal year 2029.
Despite the company's success and potential for continued customer acquisition, JPMorgan has tempered its outlook due to the limited headroom above the revised price target based on their discounted cash flow (DCF) analysis.
The firm acknowledges the possibility of Pro Medicus expanding its services to many of the largest hospital groups in the US, which it has not yet tapped into, but also recognizes the uncertainty in this growth trajectory.
JPMorgan's updated stance on Pro Medicus reflects a cautious optimism, recognizing the company's strong performance and market position while also considering the challenges of expanding its customer base further. The new price target suggests a belief in the company's value, albeit with a more conservative expectation for near-term stock performance.
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