Pro Medicus Earnings: Steady Margins but Shares Remain Expensive

Narrow-moat Pro Medicus grew first-half fiscal 2024 underlying pretax profit strongly by 29% to AUD 49 million. But revenue outside its core U.S. market was slightly weaker than expected, and staffing costs have picked up. With a weaker U.S. dollar, we decrease our EPS estimates by an average of 3% over our 10-year forecast period. However, the overall valuation impact was offset by the time value of money and reduced forecast investment in working capital, and we maintain our AUD 34.50 fair value estimate.