Healthcare imaging company PME delivered a cracking full-year result yesterday sending the stock soaring over 15% to fresh all-time highs. Everything read well with revenue up almost 20% and NPAT rising over 33% to $30.9m, the company also announced a 8c dividend although with a yields close to that on offer at the bank this stocks clearly all about growth as opposed to yield. This company has become a $6.8bn goliath without gaining the attention it deserved from many, including ourselves. The company’s debt free and locking in important new contracts even as COVID disrupts our economy, we see ongoing opportunities for PME especially from its one Visage product.
Basically the only thing to limit investors’ enthusiasm for PME after its result is its price / valuation. While growth is the key, the $68m revenue produced in FY21 is expected to jump to $95m in FY22 (+40%), clearly strong however we need to anchor this against the current market capitalisation of ~$7bn. While P/E’s are arguably irrelevant at this stage of the company’s growth phase, an estimated P/E for 2022 of ~150x is certainly already assuming ongoing strong performance. Technically, we like PME with stops under $59 from a risk / reward perspective but we wouldn’t be throwing the kitchen sink at the play just yet, we would actually be happy to add to a position at higher prices on signs the company was continuing to grow nicely.
MM likes PME with stops under $59
Add To Hit List
