Forum Topics PME > Stock Spotlight
mikebrisy
Added a month ago

PME Competitive Position

To start the ball rolling on the Stock Spotlight for $PME, I have undertaken an analysis of the firm's competitive market position.

The current draft report is available via this link. I may update it (add to, amend etc.) but I thought it worthwhile making the draft available early.

PME Competitive Positioning

As I add to and improve the report, I will do so by replacing the link above with the latest document.

I learned some new insights in doing this. Overall, the insights have not changed my current view on valuation, although one comment is worth making.

My Low and Base revenue growth scenarios are consistent with $PME and Sectra both succeeding and together dominating the global market with a combined market share by 2035 of 30%-40%. My high revenue growth scenarios are probably only consistent with $PME going on to win in the longer term, as ultimately its global market share by 2045 gets to 48%, expanding from 18% in 2035. No-one can possibly know or even guess what happens out that far into the future. But the point is that valuation much above $200 really do require $PME to be the undisputed leader. In that context, it will be interesting to monitor how the risks and key indicators identified towards the end of the report pan out over the years ahead.

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Methodology

I used the following methodology to draft this report.

  1. Generated an initial report and iterated it several times with ChatGPT.
  2. I then fed the report into Claude and requested a "critical appraisal" of the report.
  3. I then requested Claude to redraft the report, addressingall the areas for improvement it had identified, and to explicitly call out areas of weakness in the analysis.
  4. I then manually reviewed and edited the report, although I have further work to do on this.


The result product is IMHO a far higher quality of analysis than the initial single LLM product, which had several weaknesses including: 1) quoting statements in some sources as facts; 2) failing to identify sources of bias in citations; 3) minor hallucinations.

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SudMav
Added a month ago

Thanks for sharing this @mikebrisy. As someone who doesn't know much about PME, its great to see your breakdown of the company/market and how you have gone about analysing the company. For someone who has decided this year to try and lift their personal investing game, the extra value from this post is "peeking behind the curtain" and understanding the level of thought and detail that you have put into your investment thesis. I will definitely be taking a few tidbits and incorporating them into my investment thesis document structure - thanks :)


While I didn't get a chance to comment to your post in the AI thread the other day, I too have been starting to use AI as an investment sceptic, to help me try and remove biases and test my hypothesis. This exercise is extremely valuable as it tests your understanding of the business, and the more you know, the better you are at being able to spot the hallucinations. I like how you have also used multiple sources to even further and will start doing that too.

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Clio
Added a month ago

@mikebrisy - thanks for the report. Very informative. I took a quick look through and three questions occurred to me:

1) in 1.1 Software Categories and PME Coverage, it would be useful to have Sectra's capabilities outlined in a similar table. Are the two companies competiing head to head on all levels, or are there differences and nuances in their offerings?

2) In terms of key-man risk and management-succession planning, how old is Sam Hupert? I believe he's 71, which increases the significance of this point in terms of risk. i.e. it would be not so much a concern if he was 55.

3) I've long been concerned by PME's concentration in the US. As well as Europe and UK, I wonder, have they ever looked at expanding into Canada?

My 2 cents so far.

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mikebrisy
Added a month ago

@Clio good points. I’ll add to the list. I had planned to do a deep dive into Sectra. My understanding at a high level is that they compete head to head for full stack, and that Sectra is ahead in developing beyond cardiology. I will drill into this further.

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DrPete
Added a month ago

Just a quick note that this forum isn't tagged to the PME company page. Will be useful for future reference if we can continue it in there.

I missed joining the Nova stock spotlight because I was away, but am giving thought to joining this one for Pro Medicus. The only thing getting in my way is I'm trying to catch up on valuations for my holdings post reporting season. I'll see how I go.

Thanks for getting this one going @mikebrisy.

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mikebrisy
Added a month ago

@DrPete that's my bad, thanks for flagging. I'll re-create it!

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