Q1 exceeded expectations

Elekta started FY 23/24 on a healthy note, with Q1 sales and operating profitability beating street expectations for the third consecutive quarter. Top-line growth was driven by healthy contributions from both segments. Notably, margin improvements, backed by healthy momentum in the top line along with lower logistic costs, and the gains from the cost-reduction initiative were a surprise factor. Overall, with a rising global cancer incidence along with Elekta’s focus on underpenetrated markets a

Strong end to the year

Elekta reported better-than-expected Q4 results – a second consecutive quarterly beat, driven by an easing supply chain which resulted in better order book conversion. Solutions continued to grow at a faster pace vs. Service. More importantly, the firm reported an improvement in operating profitability, backed by cost reduction initiatives. Overall, Elekta remains an attractive MedTech story, underpinned by promising market dynamics, easing supply chain challenges and innovation prowess; our pos

Strong Q3 + promising takeaways

After persistent weakness in recent quarters, Elekta finally reported encouraging numbers. Sales growth was primarily driven by strong order-book conversion, which led to higher sales for Solutions. Even Service also clocked positive growth, albeit lower vs. Solutions. While operating profitability remained under pressure, there were some noticeable improvements. Overall, with the re-opening of China resulting in the gradual easing of supply-chain challenges and promising R&D initiatives and ord

Weakness persisted in Q2, but there’s hope of a turnaround

Elekta reported weak Q2 results as global market challenges persisted. Despite the top-line and profitability headwinds, the performances in the US and Europe were however rather encouraging. The positive developments w.r.t. receiving new orders and CE and FDA approval for its linacs were also promising developments. While China remains a pain-point, the on-going protests in the country could pave the way for much-needed normalisation. Overall, our material upside on the Swedish MedTech should b

Soft Q1; challenging market environment delaying business recovery

Elekta reported a soft Q1, with both the top line and profitability missing the consensus estimates. Additionally, the materially weaker gross order intake spooked the markets. This downturn was due to major ongoing external challenges – higher inflation, supply-chain challenges, and component shortages. However, the firm is trying hard to mitigate these challenges through price hikes and a cost savings programme, but this turnaround could take time and, hence, warrants patience.

Surprisingly, strong end to the year

Elekta ended FY22 on a healthy note, with Q4 results exceeding street expectations. Sales growth was witnessed in both segments. Importantly, order intake growth was maintained and the dividend was also increased by c.9%. Although profitability was visibly restrained and management expects challenges to remain in Q1, the firm’s innovation prowess, partnership initiatives and promising long-term oncology market dynamics support Elekta’s investment case and, hence, the firm emerges as one of our p

Supply-chain constraints delay performance recovery

Elekta has released its Q3 21/22 results. While healthy order intake growth is a validation of the underlying recovery in oncology treatment markets, the firm’s performance is being restrained by supply-chain constraints (resulting in both lower installations and higher costs). While our estimates should reset lower and the near term could remain uncertain, looking beyond the transient challenges, Elekta’s long-term attractiveness remains intact.

Supply-chain challenges weigh on Q3 results

Elekta reported weak Q3 21/22 preliminary results, with sales well below street expectations. Supply-chain challenges impacted both sales and operating profitability. Although order intake growth was maintained. Overall, while the firm has promising offerings, which should perform well as underlying demand recovers, the near-term (profitability) is expected to remain under pressure and, hence, our estimates should be rationalised.

Business recovery continues, although margin improvements warrant patience

Elekta’s Q2 results (particularly profitability) came in ahead of market expectations. While margin pressure has continued, the sales growth and order-book progression have remained encouraging. As oncology markets continue to recover and the promising market potential remains intact, the likes of Elekta remain in a sweet spot. Although, near-term profitability challenges are likely to persist and re-emerging COVID-19 risks could be another sentiment dampener.

Business recovery overshadowed by temporary cost headwinds

Impact of recovering markets was evident in Elekta’s Q1 sales growth and adjusted order intake numbers. However, the material weakening of margins came as a surprise. While the re-emerging pandemic risks are guided to result in near-term margin pressure, the firm remains on track to unlock healthy sales growth opportunities. Moreover, with better-margin products expected to pick up momentum, the margin progression story remains intact. Add on top the expected recovery in oncology markets, and ou

Mid-term financial targets reiterated

Driven by a growing presence in the underserved emerging markets and an increasing proportion of faster-growing software/ service business in the total mix, Elekta’s sales momentum is set to accelerate in the mid-term. Moreover, innovation and strategic partnerships with industry bigwigs should ensure a sustained market share gain. Top-line growth will be accompanied by margin expansion on the back of operational leverage and efficiency gains, with Unity leading from the front.

Pent-up demand translates into double-digit order growth

Sales momentum decelerated in Q4 as installations took a hit, especially in emerging markets. Profitability came under pressure impacted by higher supply chain and service costs. However, Elekta’s order intake surged 18%, comfortably outpacing the market leader. As pent-up demand is now being unleashed, positive order growth is here to stay. Moreover, as the market situation continues to recover, Elekta’s ability to install systems should improve, thereby pushing up sales. Details on the new mid

Sales accelerate but profitability and order intake misses the bus

Sales momentum accelerated in Q3 driven by improving market conditions and better access to customers’ installation sites – the solutions business grew faster than services business. Geographically, Asia-Pacific led the pack and the Americas returned to growth, though recovery lost pace in EMEA. Notably, profitability was hit by higher supply chain costs and an unfavourable product mix. Although the gross order intake was back in the black, it missed expectations with EMEA playing spoilsport. Gi

Mixed interims; placing forecasts Under Review

ReNeuron Group - H124 results reaffirm focus on CustomEX

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TRX is focused on the development and commercialisation of two proprietary processing technologies for the repair of soft tissue (dCELL®) and bone (BioRinse®). It has a broad portfolio of regenerative medicine products for the biosurgery, orthopaedics and dental markets. 1H’23 results highlighted the benefits and efficiencies being derived from investment and reorganisation in manufacturing capacity, with the first underlying EBITDA-positive reporting period. With further strong growth forecast

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Creo Medical has announced that its EU notified body has guided for an accelerated clinical pathway for its Speedboat UltraSlim device, the slimmest Speedboat Inject version that is compatible with most endoscopes. The reduced regulatory path will enable the company to launch the versatile product in Europe in early 2024, roughly 18 months earlier than planned. As the FDA application was submitted for this device in February 2023 (management expects clearance in Q423), UltraSlim is now projected

Trading Update

RUA have released a trading update ahead of its December interim results announcement. In contrast to the previous year, revenues have been weighted to the second half and while this has suppressed first half revenue growth, October’s and November’s revenues have largely caught up to align with management’s budget expectations. RUA’s recent strategy update and its trading update have several common themes. The reliance on partnerships to fund the development of RUA’s products in RUA Structural

Morning Note – 13 September 2023

Creo Medical - Entering phase of accelerating growth inflection

FY22 was a key inflection period for Creo with significant traction in the adoption of Speedboat Inject (its flagship electrosurgical device) and its proprietary CROMA technology platform, reflected in major robotic deals with Intuitive Surgical and CMR Surgical. Total revenue growth (8% y-o-y to £27.2m) was in line with consensus (£27m) and was primarily driven by Creo’s core technology business. Operating losses rose to £30.8m, affected by increased personnel and R&D expenses, although managem

Expert view on Creo's tech

In a well-attended Capital Markets Day on Nov 7, Creo made no new announcements but showed qualitatively how the next few years are likely to evolve with insights from three enthusiastic medical users. We took on board three important qualitative observations from the event.Firstly, the importance

The Hardman & Co Monthly: September 2022

Feature article: Macro issues dominate investor sentiment - Some basics for investors The big topics in the investment world at the moment seem to be macroeconomic. With that in mind, we thought it would be useful to revisit some of the basics of the terms being used in the current environment, and to remind investors of the things to look out for (indeed, many younger investors may not have come across some of these influences in their investing lifetime): • Recession does not affect

Morning Note – 27 November 2023

LIBERUM: Futura Medical: The Futura's coming

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Hybridan Small Cap Feast - 29/11/2023

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Avon Protection - Refocused Protection set to resume growth

Avon Protection should be well positioned to recover strongly following the value destruction caused by the relatively small Armor activity, which now faces a managed closure over the next two years. Future growth rates are diminished by the exit but remain healthy in the further focused core of Respiratory and Head Protection. Management needs to restore investor confidence as it continues with its growth strategy, in order to regain the historical premium rating to its UK defence peers. In thi