Elekta Earnings: Margin Improvement in Focus

We are maintaining our fair value estimate of SEK 127 for wide-moat Elekta EKTA B after incorporating recently released first-quarter results. We have also updated our medium-term forecast following the company’s recent capital markets day that we attended, which gave us more confidence in the company’s software offering. We currently view shares as undervalued.

Margins remain in focus for Elekta, and the company finally delivered on this front in the first quarter. Volume pull-through on the strong top-line performance helped, but Elekta is also managing its operating expenses prudently. The company’s positive margin development gives us slightly more comfort with its mid-term margin guidance, particularly as some of the inflationary and freight headwinds fade.

Much discussion during the capital markets day was on Elekta ONE, and the company partly attributed strong top-line growth to the ongoing successful adoption of this software suite. The overall product portfolio looks healthy, which should allow the company to maintain its competitiveness against Healthineers.