A rare buying opportunity in 1 of Australia's top shares?

Pro Medicus Ltd (ASX: PME) is one of the top shares of Australia, in my view. There are numerous positives to the business, yet the valuation has fallen significantly in recent times.

As the above chart shows, the Pro Medicus share price has dropped around 50% in the last year and more than 20% since 6 July 2026.

When such a high-quality business drops so much, I think it's well worth considering for a long-term investment.

As a reminder, the business describes itself as a leading healthcare informatics company, providing a full range of medical imaging software and services to hospitals, imaging centres and healthcare groups. A large portion of its revenue comes from the US.

Let's take a look at what makes it one of Australia's top shares.

Excellent revenue growth

Considering how much profit Pro Medicus makes, it's fair to say it trades on an elevated price/earnings (P/E) ratio. But, I'd also say it's delivering very strong revenue growth.

In the FY26 half-year result, revenue grew by 28.4% to $124.8 million. The business has a great track record of announcing large contracts that lock in significant revenue generation in the coming years.

For example, in May the company announced a seven-year A$90 million contract with Beth Israel Lahey Health, a healthcare organisation that has 14 hospitals in eastern Massachusetts and southern New Hampshire.

One of its latest contracts was a five-year, A$15 million contract renewal with The Ohio State University Wexner Medical Center. This renewal was negotiated with higher contract minimums and a higher fee per transaction. Contract renewals at higher rates are a great sign because they imply organic growth from its existing customer base, which is a good indicator of it being one of Australia's top shares.

Incredible profit margins

There are plenty of businesses on the ASX that do not have particularly strong margins – they need to grow revenue significantly to increase earnings.

Pro Medicus reported that in the first half of FY26, the underlying operating profit margin (EBIT) improved to 72.6%. In other words, a large majority of the new revenue dollars turn into operating profit for Pro Medicus.

Profit is the key driver of shareholder returns because it pays for the dividends and can give investors confidence to pay for a higher Pro Medicus share price.

In the FY26 half-year result, underlying profit before tax jumped 19.7% to $90.7 million, showing an increase in the profit margin because it grew faster than revenue. That's another sign of it being one of Australia's top shares.

Excellent financial position

It's great to see a business has a strong financial position, which I'd say Pro Medicus demonstrates with every result and its balance sheet. For example, at 31 December 2025, the business said it had no debt and had cash and other financial assets of $221.8 million.

When a business is in such a strong position, it means it has the freedom to pay a great dividend each result. The HY26 dividend was hiked by 28% to 32 cents per share – it has more than doubled in just three years.

I think it certainly counts as one of Australia's top shares and the recent declines could make this a good time to invest.

The post A rare buying opportunity in 1 of Australia's top shares? appeared first on The Motley Fool Australia.

Motley Fool contributor Tristan Harrison has positions in Pro Medicus. 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.

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