Despite a sluggish start to the year for the All Ordinaries Index (ASX: XAO), which has seen a modest 0.6% gain, two prominent healthcare companies are being highlighted as potential buying opportunities. Stuart Bromley of Medallion Financial Group has identified Saluda Medical Inc (ASX: SLD) and Pro Medicus Ltd (ASX: PME) as undervalued stocks with strong prospects for recovery.
Saluda Medical: Innovative Pain Management Technology
Saluda Medical, a commercial-stage medical device company, has experienced a significant downturn in its share price since its listing on December 5th. Currently trading at 41 cents, the stock is down 71.7% year-to-date. However, Bromley points to the company’s core product, the Evoke spinal cord stimulator, as a key differentiator. This device is designed to automatically adjust pain therapy in real-time, offering a sophisticated solution for chronic pain management.
Strong Financial Performance Despite Market Challenges
Bromley’s optimism is underpinned by Saluda Medical’s recent full-year financial results for FY2026. The company reported a substantial revenue increase of 28% compared to the previous year, reaching $US90.2 million. This figure also surpassed the company’s own upgraded guidance, indicating robust operational performance. Furthermore, US patient implants saw a significant surge of 50% in the fourth quarter of FY2026, demonstrating growing adoption of their technology.
Expanding Market Reach with New Approvals
A critical factor contributing to Saluda Medical’s potential rebound is the recent approval of its CAP24 surgical paddle lead. This new product is expected to expand the company’s addressable market in the United States by approximately 30%. Bromley views this expansion, coupled with the company’s innovative technology and strong revenue growth, as making Saluda Medical an attractive proposition for investors who can tolerate potential share price volatility and associated risks.
Pro Medicus: Leading the Way in Medical Imaging Software
Pro Medicus Ltd, a global leader in medical imaging software, has also seen its share price decline, currently trading at $168.79, down 24.2% since the beginning of January. Despite this recent weakness, Bromley considers the current valuation to be attractive, presenting a compelling entry point for investors.
Visage Platform Driving Growth
The company’s flagship Visage platform is gaining increasing traction among major US hospital networks. This widespread adoption is a testament to the software’s capabilities and its ability to meet the demanding needs of modern healthcare facilities. Bromley highlights Pro Medicus’s consistent revenue growth as a key indicator of its market strength.
Impressive Revenue and Profitability Metrics
In FY2026, Pro Medicus reported revenue of $261.7 million, marking a 22.9% increase over the prior corresponding period. The company’s underlying net profit after tax also saw healthy growth, rising by 24.1% to $144.7 million. These figures not only exceeded expectations but were accompanied by an exceptional underlying earnings before interest and tax (EBIT) margin of 74.9%, underscoring the company’s operational efficiency and profitability.
Strategic Contract Wins and Renewals
Pro Medicus has also demonstrated its ability to secure significant new business and retain existing clients. In FY2026, the company signed 10 new contracts valued at $407 million. In addition, six existing contracts were renewed on five-year terms, adding a further $141 million to its order book. These substantial contract wins and renewals provide a strong foundation for future revenue streams and reinforce Pro Medicus’s position as a dominant player in the medical imaging software market.
Conclusion: A Promising Outlook for Healthcare Stocks
While the broader ASX All Ordinaries Index has shown limited movement, Stuart Bromley’s analysis suggests that specific sectors, like healthcare, offer compelling investment opportunities. Saluda Medical, with its innovative pain management technology and expanding market, and Pro Medicus, a leader in medical imaging software with strong financial performance and strategic contract wins, are both identified as beaten-down stocks that are well-positioned for a significant rebound. Investors looking for exposure to the healthcare sector may find these companies warrant further investigation, particularly given their current valuations.
