Pro Medicus trades at 103.38x sales, above its 5-year average of 82.69x. Revenue has grown for three straight years. The premium reflects healthcare IT growth projections of 15%+ annually through 2030.
Alpha Score of 63 reflects moderate overall profile with strong momentum, moderate value, moderate quality, weak sentiment.
Pro Medicus shares trade at a price-to-sales multiple of 103.38x, well above the company's five-year average of 82.69x, according to Rask Media. The radiology IT software provider has seen revenue grow over the last three years. The premium valuation suggests the market has already priced in a good deal of that expansion.
The company's flagship Visage software lets radiologists view large image files on mobile devices, a capability that can speed up diagnostic decisions. That product sits within a broader healthcare IT sub-sector that Rask Media projects will grow revenue at more than 15% per year from 2024 to 2030. Global healthcare spending, particularly in the US, is forecast to rise 7% annually through 2027, reaching US$819 billion.
Healthcare companies tend to generate stable revenue because medical spending is largely essential. Rask Media noted that the sector was the best performer during the global financial crisis. That stickiness, combined with the growth rate of healthcare IT, helps explain why investors are willing to pay above the historical PS multiple for Pro Medicus.
A recent Morgan Stanley survey found that more than half of investors plan to increase their allocation to sustainable investments in 2024. Rask Media argued that healthcare, as an essential service, is well-positioned to attract that capital. The broader S&P/ASX 200 Healthcare Index has returned -11.04% per year over the last five years, compared with 3.48% per year for the ASX 200. The sector has underperformed despite the long-term tailwinds.
Pro Medicus' current PS ratio of 103.38x stands above its five-year average of 82.69x. That gap could narrow if revenue growth slows or if the market re-rates the sector. The company's revenue has been growing over the last three years. Valuation alone does not determine the share price.
Founded in 1983, Pro Medicus provides Radiology Information Systems, Picture Archiving and Communication Systems, and advanced visualization tools. These support functions from patient scheduling to rapid medical imaging interpretation. The company's MS stock page shows an Alpha Score of 62 out of 100, a Moderate label within the Financials sector. The score reflects a balanced risk-reward profile at the current valuation.
For investors considering the sector, the S&P/ASX 200 Healthcare Index has delivered negative annual returns over the last five years. The broader ASX 200 has returned positive 3.48% per year over the same period. The gap between sector performance and the growth narrative around healthcare IT highlights the risk of paying today's multiples for tomorrow's earnings.
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