The Pro Medicus Limited (ASX: PME) share price will be on watch on Friday.
This follows the release of a positive broker note out of Goldman Sachs this morning.
What is Goldman Sachs saying about Pro Medicus’ shares?
According to the note, the broker has taken its sell rating off the health imaging technology company’s shares.
Goldman has upgraded Pro Medicus to a neutral rating with an improved price target of $42.60.
And while this is still lower than the current Pro Medicus share price of $45.19, the broker spoke very positively about the company’s outlook and artificial intelligence (AI) opportunity.
What did the broker say?
Goldman Sachs highlights that over the last decade there has been a lot written about the various benefits and applications of AI in radiology. At long last, the broker believes that the technology is finally approaching a tipping point in adoption.
This could be good news for Pro Medicus, as Goldman Sachs believes it is the company that could benefit most from this technology. And while it acknowledges that it is still early days, the broker sees a big opportunity for the company.
Although still early days, we believe PME is better positioned than most to commercialise AI, as integration with its established Visage 7 Viewer provides a strong differentiation to the competition. However, competition is likely to be intense, with multiple players vying for platform share, and hence any sustained success is very far from assured.
Whilst revenue contribution is still subject to various uncertainties, PME is now generating revenue from its breast density AI algorithm, and hence we feel it is now necessary to at least attempt to recognise what could be a meaningful growth driver through the mid/long-term. Based on our current assumptions, AI could be +3-9% accretive to our revenue forecasts in FY24-26E.
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