Sorting through the turbulent year so far, one growth stock that could be undervalued is Pro Medicus Ltd (ASX: PME).
The S&P/ASX 200 Index (ASX: XJO) rallied on Wednesday, which included a 1.63% rise for Pro Medicus shares.
However, the health care technology company remains down 9.23% in the last month and is trading at $208.68 at the time of writing.
For context, the S&P/ASX 200 Health Care Index (ASX:XHJ) is down 3.82% in that period.
The best of both worlds
Pro Medicus provides various radiology information technology software and services to hospitals, imaging centres and health care groups.
The company operates globally with offices in Melbourne, Australia (headquarters), San Diego, USA (North American operations), and Berlin, Germany (European operations), serving clients across Australia, North America, and Europe
Pro Medicus is a growth stock. A growth stock is a company that investors expect will grow at a faster rate than the broader market, which is typically measured using the S&P/ASX All Ordinaries Index (ASX: XAO) or S&P/ASX 200 Index (ASX: XJO).
Typically, a growth share is a smaller, up-and-coming business.
However, unlike many other growth shares, PME is an established ASX200 company.
In fact, it is the third largest company by market capitalisation in the healthcare sector.
Essentially, PME offers the upside of a growth stock, with a strong established position in the market.
What's the upside?
PME has dropped significantly from its all time high of almost $300.00 per share back in February.
This is despite the fact it has secured key long term contracts with US based companies, and reported strong financial performance.
The company's Half Year Results revealed:
- Total revenue up 32.15%
- Underlying EBIT margin increased from 66% to 72%
- Underlying profit before tax up 42.9% to $69.9 million
I believe its strong position and fundamentals mean it is a growth stock with strong potential.
Brokers seem to agree, with Bell Potter placing a price target of $280.00. This would be an upside of 34.18%.
Brokers at trading view have a consensus target price of $263.31 (26.18% upside) and online brokerage platform SelfWealth has an average target price of $261.87.
The post Down 9% in a month! The ASX200 growth stock I'm watching appeared first on The Motley Fool Australia.
Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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