This report is an updated version of the report published on 16 May 2024 at 04:28 PM AEST.
Pro Medicus Limited (ASX: PME)
Pro Medicus Limited (ASX: PME) provides a full range of medical imaging software and services to hospitals, imaging centers and health care groups in Australia, North America, and Europe.
Recommendation Rationale – SELL at AUD 121.06
- Breached Resistance: PME’s share price has surpassed the resistance 1 level suggested in the previous report on 24 April 2024; hence, it offered a profit booking opportunity.
- Technical Standpoint: The momentum oscillator, 14-day RSI showed a level of ~69.89, reflecting an overbought zone; and thus, price is likely to face correction at this level.
- Overvalued Multiples: On a forward 12-month basis, key valuation multiples (EV/Sales, EV/EBITDA, Price/Earnings, Price/Book, and Price/Cash Flow) are higher than average of the Healthcare sector.
- Overstretched Position: PME topped its 52-week high on 16 May 2024 since it delivered a 30.3% and 33.3% YoY increase in Revenue and Net Profit in H1 FY24.
PME Daily Chart
Daily Technical Chart; Source: REFINITIV
Given its current trading levels, recent rally in the share price, and risks associated, it is prudent to book profit at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 121.06, at 11:20 AM AEST, as of 16 May 2024.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Note 1: Past performance is neither an indicator nor a guarantee of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 16 May 2024. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.
Note 4: Dividend Yield may vary as per the stock price movement.
Technical Indicators Defined: -
Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.