The Pro Medicus Ltd (ASX: PME) share price is bouncing back on Tuesday.
At the time of writing, the health imaging software company’s shares are up 7.90% to $126.21. The rebound comes after a bruising sell-off that saw the stock fall to $113.67 on Monday, its lowest level in almost 2 years.
Even with today’s lift, Pro Medicus shares remain down roughly 43% in 2026 to date.
A sharp rebound after heavy selling
The move higher follows a significant pullback over the past week.
Pro Medicus shares fell more than 20% after the company released its half-year results, triggering one of the largest single-week declines in recent years.
For the six months ended 31 December, Pro Medicus reported revenue of $124.8 million, up 28.4%, and underlying profit before tax of $90.7 million, up 29.7%. The company also delivered an underlying EBIT margin of 72.6% and declared a fully-franked interim dividend of 32 cents per share.
Statutory net profit after tax (NPAT) surged to $171.2 million, though that included unrealised gains from its investment in 4DMedical Ltd (ASX: 4DX)
Even with those results, the market marked the stock lower as investors adjusted expectations around future growth.
What drove the sell-off?
Ahead of the result, Pro Medicus shares had been trading at high levels compared with recent earnings.
Although the company delivered solid growth, the result did not materially change the near-term earnings outlook. Management noted that its largest implementation went live late in October, limiting its contribution to the period.
In the days that followed, the share price declined sharply. The move down to $113.67 earlier this week returned the stock to levels last seen in May 2024.
However, today’s rebound suggests some stabilisation after several sessions of continued heavy selling.
Time to chase the rebound?
The underlying business remains highly profitable and capital-light. It also has a strong balance sheet with minimal debt and continues to generate solid operating cash flow. Pro Medicus continues to secure large North American contracts and has more than $1 billion in contracted revenue over 5 years.
However, the broader price trend remains negative.
Even after today’s gain, the shares are still well below their previous trading range. One strong session is not enough to confirm a change in direction.
Investors will be watching to see how quickly recent contract wins flow through to reported earnings.
Despite the 43% fall this year, the share price will ultimately track profit growth. Execution over the next few reporting periods will be very important.
The post Pro Medicus shares rally off recent lows. Time to chase? 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.