Goldman Sachs raises Pro Medicus share price target
The Pro Medicus Limited (ASX: PME) share price raced 16 per cent higher to $31.50 yesterday after it posted a net profit of $19.1 million revenue of $50.1 million for fiscal year 2019. According to financial news wires, UBS raised its valuation on the group to $32.50 but stuck with a fence-sitting ‘neutral rating’, while Morgans raised the shares to an ‘add’ rating, with Bell Potter on ‘hold’. Goldman Sachs also issued a note yesterday and claimed the “valuation leaves little room for error” in cautioning: “Although this is a high-growth company (30% EPS CAGR), the core driver (Visage 7) has been commercial for over a decade, and is not the sort of nascent technology that current valuation multiples would normally be associated with (47x NTM sales, 67x NTM EBITDA, 110x NTM P/E).”. As a result it raised its valuation on Pro Medicus to $27.50 and stuck with a ‘neutral’ rating. Overall then I wouldn’t suggest buying Pro Medicus shares at $30 as its valuation has got ahead of itself for now. If you’re interested in the software-as-a-service space Xero Limited (ASX: XRO) or Infomedia Limited (ASX: IFM) offer better value in my opinion. If you're looking for better value may I suggest The Motley Fool’s #1 BANK STOCK for 2019I own it and Pro Medicus, and they're like chalk and cheese on valuation grounds today....