Sell alert! Why this expert is calling time on Pro Medicus shares

Pro Medicus Ltd (ASX: PME) shares are enjoying a welcome day of strong outperformance.

Shares in the S&P/ASX 200 Index (ASX: XJO) health imaging company closed yesterday trading $116.97. In early afternoon trade on Tuesday, shares are changing hands for $123.45 apiece, up 5.5%.

For some context, the ASX 200 is up 0.4% at this same time.

Despite that welcome reprieve, Pro Medicus shares remain down a painful 44.5% in 2026.

And Fairmont Equities’ Michael Gable is concerned that the ASX 200 healthcare stock could come under further selling pressure if investor sentiment doesn’t turn around (courtesy of The Bull).

Time to exit Pro Medicus shares?

“This medical technology business is one we have successfully traded on several occasions during the past few years,” said Gable. “However, since mid-2025, we have stayed away from expensive technology companies, such as PME, due to negative market sentiment.”

As for Pro Medicus H1 FY 2026 results, he noted:

On February 12, 2026, the company announced revenue from ordinary activities of $124.8 million in the first half of 2026, an increase of 28.4%. Underlying net profit of $67.3 million was up 29.7%.

However, the share price was severely punished following the result.

Indeed, Pro Medicus shares closed down a sharp 23.9% on the day the company reported those strong results.

“Perhaps, the result fell short of market expectations,” Gable said.

Explaining his sell recommendation on the ASX 200 stock, he concluded, “The shares have fallen from $330.48 on July 17, 2025 to trade at $132.86 on February 12, 2026. The shares may fall further if sentiment doesn’t improve.”

Why did the ASX 200 health imaging company tumble on its results?

Like Gable, I was scratching my head when Pro Medicus shares plunged 23.9% last Thursday after the company posted record half year profits.

The six-month period also saw Pro Medicus ink more than $280 million in new contracts, and management increased the fully franked interim dividend by 28% to 32 cents per share.

Atop the high market expectations that Gable pointed to, I believe investors are also jittery regarding the potential for rapidly evolving artificial intelligence technologies to impact the company’s future earnings.

Asked about the threat that AI might pose to the outlook for Pro Medicus shares last week, CEO Sam Hupert said, “You are correct in that there has been an unprecedented amount of hype around the disruption AI will have on the software industry and to some degree healthcare.”

Hupert noted, “There are concerns at the huge level of capital expenditure committed to develop AI and build data centres to run it.”

But he believes Pro Medicus actually stands to benefit.

“Ours is a capital-light, software-only model. If anything, we will be the beneficiaries of the infrastructure funded by others,” Hupert said.

The post Sell alert! Why this expert is calling time on Pro Medicus shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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.