Elekta

Yesterday, Q1 results came in better than expected (8.5% beat on EBITDA) but soft (weak?) Q2 outlook spooked investors. The company says the FX headwinds and tariffs impact will continue in Q2, triggering negative organic growth. America and China are likely to remain soft before bouncing in H2. However, the company confirmed its 2026 (April) targets. Beyond short-term challenges, the current valuation is really attractive and offers an attractive opportunity for long-term investors. 

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The drop in Elekta's share price has been staggering. Valuation is now really attractive, even if we have to tweak our numbers downwards. Despite the disappointment of the Q2 outlook, there are reasons to be hopeful. First, the expected bounce in China in H2 is a massive positive. China's plan regarding cancer is very ambitious and the need for Elekta's machines remains massive. The fact that the Chinese order book is now rising again after the crackdown on corruption is a good sign and while other med tech companies don't mention an uptick in orders from China, the fact that Elekta does is reassuring. In the US, the company resubmitted EVO for FDA clearance. Once this is done, the sales in the US should pick up again. 

Valuation appears REALLY attractive with PE for current year (April 26) below 12x and below 10x for April 27. Unless we find a universal cure for cancer which would make the use of Elekta's machines useless, our expert believes the current valuation is a very interesting entry point especially if, as the company expects, growth in China is coming back in three months from now.