Up 1,636%, but can 4DMedical shares reclaim their record high?

4DMedical Ltd (ASX: 4DX) shares took a breather during Friday’s session, edging 1% higher to $4.10.

The healthcare technology company has pulled back around 12% over the past six months and now trades roughly 46% below the record high it reached in April.

However, the longer-term picture looks very different. This ASX healthcare share is still up an astonishing 1,636% over the past 12 months. Yes, that’s more than sixteen-fold in just one year.

So, after such an extraordinary run, could 4DMedical shares eventually reclaim their all-time high?

Why investors have become so bullish

The biggest catalyst behind the remarkable rise of 4DMedical shares has been growing confidence in its commercial prospects.

The company has developed proprietary respiratory imaging technology that produces four-dimensional lung scans, giving doctors significantly more information than traditional imaging methods. The technology has applications across chronic respiratory diseases, lung cancer, and surgical planning.

Importantly, management has shifted its focus from proving the technology to commercialising it.

US growth and AI investments

Over the past year, 4DMedical has secured several significant contracts and partnerships across the US. Recently, the business signed a major agreement with SimonMed, helping expand its CT:VQ lung imaging technology across the US.

Management believes the deal could lift its addressable market to around US$3 billion with major healthcare providers and government agencies. These agreements have strengthened investor confidence that revenue growth can accelerate as adoption increases.

The company has also continued investing in artificial intelligence capabilities to expand the usefulness of its imaging platform and create additional opportunities within respiratory care.

The path back to record highs

For 4DMedical shares to revisit their April peak, investors will likely need further evidence that commercial momentum is translating into sustainable financial results.

Like many emerging healthcare technology companies, 4DMedical remains focused on scaling its business rather than generating large profits today. That means investors are placing significant value on its future growth potential.

Continued contract wins, increasing scan volumes, expanding recurring revenue, and progress in the US healthcare market could all help support a higher valuation over time.

Heavy investments in research

Despite its enormous gains, 4DMedical remains a higher-risk investment.

Commercialising new medical technology can take longer than expected. Particularly, when healthcare providers require clinical validation and budget approvals before adopting new products.

The company also faces competition from established medical imaging businesses and must continue investing heavily in research, product development, and sales to maintain its competitive advantage.

As a high-growth healthcare stock, 4DMedical shares are also likely to remain volatile. Even positive companies can experience large share price swings as investor sentiment shifts.

The post Up 1,636%, but can 4DMedical shares reclaim their record high? appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.