Insiders are buying. Can Pro Medicus shares finally turn the corner?

When company executives start buying shares with their own money, investors usually pay attention.

That is what is happening at Pro Medicus Ltd (ASX: PME). In late December, several senior leaders stepped in to buy shares on market, committing significant personal capital as the stock continued to slide.

Just weeks later, Pro Medicus shares hit an 8-month low of $210.01 on 7 January. By Friday’s close, the stock was trading at $210.21, down 2.64% for the day and about 22% lower over the past 12 months.

After such a sharp pullback, the key question is whether insider buying signals confidence that the worst of the selling may be over.

A strong pullback for a premium stock

Pro Medicus has been one of the ASX’s standout growth stories for years, driven by strong demand for its Visage medical imaging software. The company has built a reputation for high margins, recurring revenue, and long-term contracts with major hospitals, particularly in the US.

At its peak last year, the share price traded at $336. Even after the recent sell-off, Pro Medicus remains valued at around $22 billion, indicating the high regard investors continue to hold for the business.

That said, the stock has gone through a clear reset. Higher interest rates and weaker sentiment towards expensive growth stocks have weighed heavily on the share price. Importantly, there has been no major downgrade to earnings guidance or contract momentum, suggesting the pullback has been more about valuation than fundamentals.

What the chart is showing

Technically, the stock has been in a clear downtrend since late last year.

The $210 level now stands out as a key support area, with buyers stepping in each time the stock has dipped below that level. If this support fails, the next downside level would likely be closer to $200.

Momentum indicators suggest selling pressure may be easing. The relative strength index (RSI) is sitting around 33, which is close to oversold territory. While this does not guarantee a bounce, it does suggest the buyer may be starting to regain interest.

On the upside, resistance sits near $230, followed by a stronger level around $250. A move above those levels would likely signal improving sentiment.

Insider buying stands out

One of the clearest signals during this sell-off has been buying from Pro Medicus’ leadership team.

In late December, several senior executives and directors bought shares on market as the price continued to fall. CEO Dr Sam Aaron Huppert and Executive Director Anthony Hall each invested close to $1 million, while Chairman Peter Kempen also added to his holdings with a $134,000 purchase.

In total, management committed well over $2 million of personal capital in a short period. While insider buying is no guarantee of short-term gains, multiple large purchases at similar price levels often reflect confidence in the company’s outlook and long-term value.

Is now the time to buy?

Pro Medicus remains a high-quality business with a strong competitive position and long-term growth potential. While the stock still trades at a premium valuation and short-term volatility could persist, the combination of technical support, a low RSI, and significant insider buying suggests that the risk-reward balance may be improving.

For long-term investors, this recent weakness may be worth watching closely as sentiment begins to stabilise.

The post Insiders are buying. Can Pro Medicus shares finally turn the corner? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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.