Pro Medicus Earnings: Margins Improve but Shares Remain Expensive

Narrow-moat Pro Medicus increased interim fiscal 2025 underlying EBIT by 43% to AUD 70 million. While revenue grew by 31% to AUD 97 million, broadly tracking our full-year forecast, underlying EBIT margin expanded more than expected, up roughly 600 basis points to 72%. We increase our EBIT forecasts by 3% on average over the next 10 years. Our revenue forecasts soften by 2% on average due to the slight weakening of the US dollar and stagnant sales outside the US, but our forecast midcycle EBIT margin increases to 77% by fiscal 2034 from 73% prior. With significant new contracted revenue about to come online, we are more optimistic and our fair value estimate increases by 4% to AUD 48.