C-RAD: New guidelines should accelerate growth – ABG


We expect higher growth on the back of new guidelines
EBIT estimates up 12-16% for ’22e-’24e
Defensive, high growth and valued 58% below peers

New guidelines from influential US association
The American Association of Physicists in Medicine (AAPM) has released a report that includes clinical guidelines and recommendations for surface guided radiotherapy (SGRT). In other words, how to use and implement C-RAD’s products. AAPM recommendations are not only seen as standard in North America but are highly influential in Europe as well. We believe broader adoption of SGRT has been held back by a lack of technical recommendations and consensus documents supporting the technology. We therefore find this report to be an important catalyst for further market adoption and thereby accelerated growth. As such, we raise ’22-’24e sales by 3-5% and EBIT by 12-17%.

Should lead to further SGRT adoption
Prior to the AAPM guidelines, we estimated that the attachment rate of SGRT systems to linacs was around ~30%. Now, we estimate that by 2025 the attachment rate will increase to >45%. Based on this, we expect that the overall market for SGRT installation volumes should grow by a CAGR of 12% in ’20-25e. We expect C-RAD to be able to grow by a CAGR of ~18% during the same period, with the above-market growth coming in equal part from volume-driven market share gains and price increases supported by a higher US share of sales. As we expect C-RAD to have ~40% incremental EBIT margins, thanks to a high gross profit margin of 61% with limited opex growth, we expect EBIT to increase by a CAGR of 49% over the same period.

Set for 49% EBIT CAGR, at 58% discount to peer group
We raise our fair value range to SEK 47-97 (45-95). The relatively low increase is a result of broadly lower medtech valuations offsetting most of our estimate increases. Nevertheless, C-RAD offers a unique and direct exposure to SGRT, with an attractive position in a >SEK 1.4bn duopoly. With a 49% EBIT CAGR in ’20-’25e, C-RAD

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