Morningstarin Euroopan osaketutkimuksen johtaja Alex Morozov kommentoi Elektan kolmannen neljänneksen tulosta.
“Despite the weakness in the third quarter for Elekta, we're maintaining our favorable long-term opinion. We're planning to slightly reduce our local currency full-year forecast for top-line and earnings growth, but the currency tailwind makes the overall impact on valuation immaterial. The company saw demand decelerate in the United States, Japan, Russia, and China, but management was adamant that much of the weakness was due to timing, and it maintained its full-year targets both on the top line and cash flow. Our wide moat rating is unchanged, and we believe the stock remains undervalued.
“Trends flipped in the third quarter, with Europe, the Middle East, and Africa rebounding after the weak second quarter, while the North American market showed substantial order deterioration; China, Russia, and Japan also slowed. Asia Pacific disappointed for the second quarter in a row; Elekta's outsize exposure to this marketplace relative to its competitors offers greater growth opportunity but also leaves it more vulnerable to broad order delays, which was again the case in this quarter. The company did have tough comps in the quarter, both in the U.S. and China, with large deals with McLaren Health and PLA booked in the third quarter of last year.
“While the company reiterated its full-year targets despite back-to-back weaker-than-expected quarters, we're concerned that the magnitude of the bounce-back targeted for the fourth quarter might be tough to attain. Management maintains it has good visibility in its order patterns and has a big backlog of orders slated for the fourth quarter, including Gamma Knife. We're concerned, though, that structural changes in the U.S. market, mainly hospital consolidation and longer lead times, could make forecasting order timing more challenging, and the conversions might extend into fiscal 2016.
“The fourth-quarter pipeline is also critical for Elekta to reach its cash flow conversion target, but the company did show a few improvements in metrics such as days' sales outstanding. That said, the implied fourth-quarter conversion projection will be extremely challenging to achieve and hinge on the company's ability to deliver a few large bookings, which management hinted will happen. Our confidence in Elekta's long-term favorable trends is unshaken, but the near-term environment remains quite turbulent.”
.jpg)
