Stock Update
Value
Australia

Pro Medicus Ltd (ASX:PME)

13 Feb 2020
By
Pro Medicus Limited develops and supplies proprietary software and IT solutions for large medical corporations and individual medical group practices. The Group's services include billing and management systems for diagnostic imaging providers, clinical reporting systems, and appointment booking services. Pro Medicus' e-mail system delivers encrypted diagnostic reports to group doctors.

PME has been a holding within the Value Strategy since September – it was bought right after it reported its FY19 profit numbers – and the stock has been one of the strategy’s biggest disappointments after a stock sell-down from the founder scared off investors. Irrespective of its share price performance, the underlying numbers ensured the company remained a holding within the strategy and today’s profit numbers were going to be the determinant on whether the stock remained a holding going forward.

Fortunately, PME released a pleasing set of numbers which have supported a 6% jump in the stock today. PME is now actually roughly 35% above its December lows so we have seen a significant re-rating of the stock, and the hope now is that with a solid set of numbers in the minds of investors we may continue to see the stock regain its previous losses.

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6
Comments

Steve Donaldson

Good point…I also see a 10% drop to-day…is there a reason we don’t know?

Shannon Rivkin

Hi Steve,

Please see my response to Ralph below.

Regards,
Shannon Rivkin

John Gordon

PME suffered a huge drop. $30 in the morning – $24.40 at 1 PM!! Is this a buying opportunity?

Shannon Rivkin

Hi John,

Please see my response to Ralph below.

Regards,
Shannon Rivkin

Ralph Esslinger

What is the cause for it to drop %10?

Shannon Rivkin

Hi Ralph,

My best guess is a ‘sell the fact’ is the reason for the fall. The stock rallied hard coming into today’s result, and there is likely some profit-taking going on after the recent rally. We will see where the stock settles over the next few days, but we’ll continue to hold it until at least the next strategy rebalance date.

Regards,
Shannon

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