Pro Medicus Pullback to $255: Buy the Dip or Wait for Another Entry?

Pro Medicus (ASX: PME) has slid 25% from its July peak, dropping from $336 to around $255, a 25% decline that’s caught the attention of value-seeking investors. This morning, Bell Potter upgraded the medical imaging software company from Hold to Buy, arguing the pullback creates an attractive entry point ahead of what could be the company’s strongest growth phase yet. With three major US hospital contracts already secured in the first four months of FY26, triple last year’s pace, and the industry’s biggest trade show approaching in late November, the broker believes the recent weakness reflects profit-taking rather than fundamental deterioration.

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Bell Potter Sees Pullback as Buying Opportunity, Not Warning Sign

The 25% pullback wasn’t triggered by disappointing results or operational problems. Bell Potter attributes the decline to profit-taking after an extraordinary run from $60 in late 2022 to over $330 by mid-2025. Following such steep gains, consolidation is natural and potentially healthy for long-term investors seeking entry points.
What caught the broker’s attention is the underlying business momentum that the market appears to have overlooked:

Contract velocity is accelerating:

– 3 major US hospital deals secured in first 4 months of FY26
– Just 1 deal in the same period last year
– This represents a tripling of contract wins at the critical early stage of the fiscal year

The significance here is timing. Last year’s comparable period saw only one announcement, followed by six new contracts over the remainder of the fiscal year. If FY26 follows a similar pattern after this stronger start, Pro Medicus could be heading into its most prolific year yet. Bell Potter’s analysts believe the market has focused too heavily on the share price decline while missing this fundamental acceleration.

Pro Medicus Positions for Major Catalyst at RSNA Conference

The broker’s upgrade timing appears deliberate. The Radiological Society of North America (RSNA) annual meeting, medical imaging’s biggest trade show, takes place in late November. Bell Potter specifically calls this “the major selling event of the year,” suggesting expectations for meaningful contract announcements.

Key catalysts on the horizon:

– RSNA conference in late November (prime platform for new contract wins)
– High-profile renewals expected from Yale New Haven and Mayo Clinic over the next 1-2 years
– Existing contract pipeline showing strength with major academic medical centres

These aren’t small regional hospitals; Yale New Haven and Mayo Clinic are prestigious institutions that influence purchasing decisions across the broader healthcare system. Successful renewals and expansions could drive significant incremental revenue while reinforcing market leadership.

The Investor’s Takeaway

Pro Medicus trades at a P/E ratio of approximately 200x forward earnings, which demands scrutiny. However, the company forecasts 38% EPS growth for FY26, and roughly 90% of revenues come from recurring contracts with long-term visibility. This isn’t speculative growth; it’s contracted revenue from major healthcare systems that rarely switch imaging platforms.

For growth investors, this represents proven technology leadership with accelerating wins, high-margin recurring revenue, and a clear US market runway. The pullback to $255 offers a better entry than July’s $336 peak, especially with RSNA approaching.

For value-conscious investors, the valuation remains stretched even after the 25% decline. At 200x forward earnings, the market prices in near-perfect execution with minimal room for disappointment. Any slowdown in contracts or broader tech sector rotation could pressure shares further.

The critical question: Does Pro Medicus’s market dominance justify the premium? Bell Potter clearly believes it does, pointing to tripling contract wins and upcoming catalysts. Conservative investors might wait for consolidation below $250, but those comfortable with premium valuations may view this as the entry opportunity they’ve been seeking.