Elekta AB (publ) (EKTA-B.ST) | Investment Case

1. Company Snapshot

1.a. Company Description

Elekta AB (publ), a medical technology company, provides clinical solutions for treating cancer and brain disorders worldwide.The company offers Versa HD, a brain metastases solution; Elekta Unity, a MR-Linac technology; Elekta Harmony, a linear accelerator; Elekta Infinity for treating a range of patients with simple-to-complex radiotherapy needs; Elekta Synergy, a digital accelerator for advanced image-guided radiation therapy; treatment management solutions; automated and integrated quality assurance solutions; and hardware and software motion management technology.It also provides MOSAIQ Plaza for multidisciplinary cancer care; Elekta Axis Cloud, a managed hosting service; Elekta Studio, an image-guided brachytherapy solution; ImagingRing, a mobile CT scanner; Oncentra Brachy, a smart tool that facilitate repetitive tasks; Venezia applicator that enables the radiation oncologist to treat locally advanced cervical cancer; Elekta Flexitron afterloader for enabling the precise execution of all steps in the workflow; and Geneva, an applicator for cervical cancer treatment.

In addition, the company offers Leksell Gamma Knife Icon for personalized radiation treatment; Leksell Gamma Knife Perfexion, a tool for neurosurgeons; Leksell Gamma Knife Lightning for accelerated radiosurgery.Further, it provides neurosurgery products comprising Leksell Vantage Stereotactic System for intracranial neurosurgery; and Leksell Stereotactic System or minimally invasive stereotactic neurosurgery.The company was incorporated in 1972 and is headquartered in Stockholm, Sweden.

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1.b. Last Insights on EKTA

Elekta AB (publ) recent performance was negatively driven by weaker sales expectations in China and the United States, prompting the company to lower its full-year guidance. The company's robust order growth and record cash flow in Q3 2025 were overshadowed by headwinds in the US and China, impacting overall sales and profitability. Furthermore, the departure of CEO Gustaf Salford has raised concerns about the company's ability to improve profitability and drive growth.

1.c. Company Highlights

Last Price	56.9
Change Percentage	-0.18%
Open	57.35
Previous Close	57
Market Cap ( Millions)	20888
Volume	1361059
Year High	66.7
Year Low	40.64
M A 50	56.07
M A 200	52.24

FCF Yield	9.59%
Dividend Yield	4.22%
ROE	-0.45%
Debt / Equity	91.40%
Net Debt / EBIDTA	263.21%
Price To Book	2.73
Price Earnings Ratio	-557.45
Price To FCF	10.42
Price To sales	1.22
EV / EBITDA	14.22

2. Elekta's Q3 Earnings: A Solid Performance Amidst Currency Headwinds

Elekta reported a 2% increase in net sales for the third quarter, with Solutions growing by 1% and Service by 3%. The company's gross margin improved by 120 basis points, driven by product launches and price improvements. However, currency fluctuations had a significant negative impact on net sales and gross margin, amounting to more than SEK 500 million. The company's operating margin improved by 20 basis points, and its cash EBIT margin adjusted for currency impact was up 170 basis points. Earnings per share (EPS) came in at 0.02617, significantly lower than analyst estimates of 1.59.

Publication Date: Mar -08

                                    📋 Highlights
                                    Cost Restructuring Initiative::
                                                SEK 417 million restructuring charge in Q3, targeting over SEK 500 million cost reduction (30% COGS, 70% OpEx).
China Market Recovery::
                                                Double-digit order growth in Q3, with 10% expected second-half growth, driven by market underpenetration and Evo approvals.
Margin Improvements::
                                                Gross margin up 120 bps, operating margin up 20 bps, and cash EBIT margin up 170 bps QoQ.
U.S. Market Challenges::
                                                6% decline in Americas revenue, but double-digit U.S. order growth and Evo-driven backlog conversion to new revenue.
Currency & Tariff Headwinds::
                                                Over SEK 500 million negative impact on sales and margins, yet cash flow improved by SEK 400 million YoY.

                                

Regional Performance and Order Growth

The Americas business decreased by 6%, which the company considers a "must-win battle." However, the company is seeing double-digit order growth in the U.S., driven by the launch of Evo upgrades. In China, the company expects double-digit growth in the second half of the year, with positive revenue and orders in Q3. According to Jakob Just-Bomholt, "we've seen double-digit growth on orders in the second half, with positive revenue and orders in Q3," attributing this to market recovery and the fact that the market is heavily underpenetrated in China.

Cash Flow and Cost Savings

Elekta's cash flow is improving, with a significant stronger cash flow over the last 12 months compared to the previous year. The company is focusing on cost reduction, with a goal of reducing costs by more than SEK 500 million, and has taken a restructuring charge of SEK 417 million this quarter. The company expects a substantial amount of the cost-saving program to materialize in Q4.

Valuation and Outlook

Analysts estimate next year's revenue growth at 4.1%. Elekta's current valuation metrics include a P/E Ratio of -607.41, P/B Ratio of 2.97, and P/S Ratio of 1.33. The company's EV/EBITDA is 15.26, and its Dividend Yield is 3.87%. The market seems to be pricing in a challenging environment, but the company's efforts to simplify its operating model and reduce costs are expected to drive future growth. With a Capital Markets Day scheduled for June 17, investors will be looking for further updates on the company's financial plan and strategy.

3. NewsRoom

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.82%)

6. Segments

Hardware

Expected Growth: 5%

Elekta AB's 5% growth in Hardware segment is driven by increasing demand for radiation therapy and oncology solutions, expansion into emerging markets, and strategic partnerships. Additionally, advancements in digitalization and automation of cancer care, as well as growing adoption of stereotactic body radiation therapy (SBRT) and brachytherapy, contribute to the segment's growth.

Services (Including Software)

Expected Growth: 7%

Elekta AB's 7% growth in Services (Including Software) is driven by increasing demand for cancer treatment and radiation therapy, expansion into emerging markets, and strategic partnerships. Additionally, the company's software solutions, such as Monaco and MOSAIQ, are experiencing high adoption rates, contributing to the segment's growth.

Software

Expected Growth: 5%

Elekta AB's software segment growth is driven by increasing demand for cancer treatment and radiation therapy, adoption of digital healthcare, and strategic partnerships. The company's innovative solutions, such as Monaco and Unity, are gaining traction, while expansion into emerging markets and growing recurring revenue streams also contribute to the 5% growth rate.

7. Detailed Products

Gamma Knife Icon

A non-invasive radiosurgery system for treating brain disorders and cancer

Elekta Unity

A high-field magnetic resonance imaging (MRI) guided radiation therapy system

Versa HD

A high-definition dynamic radiosurgery system for treating cancer and brain disorders

Monaco Treatment Planning System

A radiation therapy treatment planning system for cancer treatment

MOSAIQ Oncology Information System

A comprehensive oncology information system for managing patient data and treatment plans

EstroCare

A patient-centric software solution for managing radiation therapy treatment plans

8. Elekta AB (publ)'s Porter Forces

Forces Ranking

Threat Of Substitutes

Elekta AB (publ) operates in a niche market with high barriers to entry, reducing the threat of substitutes. However, the company's products and services can be substituted with alternative treatments, such as surgery or chemotherapy, which poses a moderate threat.

Bargaining Power Of Customers

Elekta AB (publ) has a diverse customer base, including hospitals and cancer centers, which reduces the bargaining power of individual customers. Additionally, the company's products and services are often critical to customers' operations, making it difficult for them to negotiate prices.

Bargaining Power Of Suppliers

Elekta AB (publ) relies on a few key suppliers for critical components, which gives them some bargaining power. However, the company's large size and global presence also give it some negotiating power, mitigating the threat.

Threat Of New Entrants

The radiation therapy market has high barriers to entry, including significant capital expenditures and regulatory hurdles, making it difficult for new entrants to join the market.

Intensity Of Rivalry

The radiation therapy market is highly competitive, with a few large players competing for market share. Elekta AB (publ) faces intense competition from companies like Varian Medical Systems and Siemens Healthineers, which can lead to pricing pressure and increased marketing expenses.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	40.67%
Debt Cost	4.30%
Equity Weight	59.33%
Equity Cost	9.07%
WACC	7.13%
Leverage	68.54%

11. Quality Control: Elekta AB (publ) passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Fielmann

A-Score: 5.9/10

Value: 4.4

Growth: 5.0

Quality: 7.3

Yield: 4.4

Momentum: 6.0

Volatility: 8.3

1-Year Total Return ->

ConvaTec

A-Score: 4.8/10

Value: 2.8

Growth: 5.3

Quality: 6.0

Yield: 3.1

Momentum: 5.0

Volatility: 6.3

1-Year Total Return ->

Ypsomed

A-Score: 4.1/10

Value: 2.6

Growth: 8.2

Quality: 5.7

Yield: 0.6

Momentum: 3.0

Volatility: 4.3

1-Year Total Return ->

Tecan

A-Score: 3.9/10

Value: 4.9

Growth: 4.1

Quality: 6.1

Yield: 2.5

Momentum: 1.0

Volatility: 4.7

1-Year Total Return ->

Elekta

A-Score: 3.4/10

Value: 3.8

Growth: 4.0

Quality: 3.2

Yield: 6.9

Momentum: 1.0

Volatility: 1.7

1-Year Total Return ->

Amplifon

A-Score: 3.4/10

Value: 5.0

Growth: 5.4

Quality: 4.7

Yield: 2.5

Momentum: 0.0

Volatility: 2.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-1.31%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.13%

Elekta AB (publ) - SE0000163628

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on EKTA

1.c. Company Highlights

Higher Yield

Less Volatile

Fairly Valued

Earnings Miss

Revenues Miss

Revenues Beats

Stable Momentum

Medium Volatility

Earnings Beats

Average Yield

Average Growth

Weak Momentum

Average Quality

Lower Quality

2. Elekta's Q3 Earnings: A Solid Performance Amidst Currency Headwinds

Regional Performance and Order Growth

Cash Flow and Cost Savings

Valuation and Outlook

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.82%)

6. Segments

Hardware

Expected Growth: 5%

Services (Including Software)

Expected Growth: 7%

Software

Expected Growth: 5%

7. Detailed Products

Gamma Knife Icon

Elekta Unity

Versa HD

Monaco Treatment Planning System

MOSAIQ Oncology Information System

EstroCare

8. Elekta AB (publ)'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Elekta AB (publ) passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

56.9$

Current Price

56.9$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA