Compumedics Limited

The fund managers believe that Compumedics Limited is an undervalued medical technology company with strong core operations and promising growth opportunities. In their opinion, the company’s Diagnostic Medical Device segment, which has demonstrated stable revenues and profitability over many years, is poised for a strong rebound following the easing of COVID-related disruptions such as supply chain delays and restricted hospital access. They note that leading indicators, including a robust order backlog and management’s guidance, support the potential for Compumedics to approach or surpass its record FY19 financial performance in FY23. A weaker Australian dollar is also expected to provide a material tailwind to earnings. Furthermore, the launch of the Falcon home sleep testing device is seen as a strategic expansion into the growing home diagnostics market. In parallel, the fund managers view the Medical Innovation segment—comprising Brain Imaging, eHealth, and Consumer Applications—as offering substantial optionality. In particular, Brain Imaging with MEG devices and the growing revenue contribution from Nexus 360 software are highlighted as encouraging signs of commercial progress. Although these initiatives may continue to weigh on near-term earnings, they are viewed as having the potential to drive significant long-term value. Overall, the fund managers see compelling upside given the company’s low valuation and multiple avenues for growth.