Danske Bank resumes Elekta with 'buy' on pricing power, margins

Elekta AB (publ)

16/01/2024 14:22

** Danske Bank reinitiates coverage of radiation therapy
equipment maker Elekta  EKTAb.ST  with "buy," seeing the Swedish
company's margin recovery driven by improving pricing
environment and a new, more competitive, product portfolio
    ** Danske says there is a misconception of stickiness of
margin depression among investors and sees clear margin drivers
resulting in 2025/26E adj. EBIT 15% compared to consensus
    ** New products as well as an increased share of high-margin
products should drive above-consensus gross margins, the broker
says
    ** It also sees Elekta benefiting from less pricing
competition from Varian
        ** Shares are trading at an "unusually low valuation" of
11.5x EV/EBIT 2024/25E, 35% below peers, the broker adds
    ** The broker sets TP SEK 110, a 40% upside to Monday's
closing price
    ** Out of 13 analysts that cover the Elekta four rate it
"strong buy" or "buy," three rate it "hold," and six rate it
"sell" or "strong sell" - LSEG
    

 (Reporting by Elsa Ohlen)
 ((elsa.ohlen@thomsonreuters.com;))