Proton Therapy Expansion Will Transform Global Cancer Treatment

Key Takeaways

• Sustained demand for advanced proton therapy and expansion into new markets are driving long-term revenue growth and improved earnings visibility.
  
• Continued R&D investments and growth in service contracts are enhancing margins, competitive positioning, and recurring high-margin revenue streams.
  
• Rising competition, geopolitical risks, and regulatory hurdles threaten IBA's pricing power, margins, and growth potential, while project delays and high costs undermine earnings visibility.

Catalysts

Designs, produces, and markets solutions for cancer diagnosis and treatments in Belgium, the United States, and internationally.

• The growing global cancer burden and the aging population continue to create sustained demand for advanced therapies like proton therapy, as demonstrated by record backlog conversions and robust new order intake (notably from prestigious institutions in Germany and ongoing expansion in Asia and the US). This supports long-term revenue visibility and justifies higher growth expectations not reflected in current valuation.
  
• The ongoing expansion of IBA's installed base is boosting service and maintenance contracts, leading to high-margin, recurring revenue streams. With 46 active clinical sites and 57 operational service contracts globally-plus a pipeline of new installations-this recurring revenue base is poised to improve earnings visibility and drive future net margin expansion.
  
• IBA's accelerated R&D investments (e.g., DynamicARC for proton therapy, new imaging solutions, and radiopharma theranostics platforms) enhance technological differentiation and are expected to facilitate premium pricing, higher average selling prices, and better competitive positioning-potentially leading to improved long-term EBITDA and net margins.
  
• Increased access to advanced medical technologies in emerging markets, such as China, the US, and Spain, is evidenced by multiple large-scale procurement activities and ongoing installations. This expands IBA's addressable market and supports durable revenue growth, especially as recent regulatory changes are being partially mitigated by partnerships and local market strategies.
  
• Recent clinical evidence from major US centers demonstrating superior outcomes with proton therapy is reinvigorating demand-particularly in large healthcare systems-pointing to a potential step change in adoption trends. This should strengthen both medium
• and long-term revenue growth prospects and could lead to higher gross margins as utilization improves.

Ion Beam Applications Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Ion Beam Applications's revenue will grow by 3.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 2.9% today to 6.1% in 3 years time.
• Analysts expect earnings to reach €39.5 million (and earnings per share of €1.33) by about September 2028, up from €17.0 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.1x on those 2028 earnings, down from 20.8x today. This future PE is lower than the current PE for the GB Medical Equipment industry at 20.8x.
• Analysts expect the number of shares outstanding to grow by 0.29% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.18%, as per the Simply Wall St company report.

Ion Beam Applications Future Earnings Per Share Growth

Risks

• Increasing competitive intensity, especially in the U.S. market and the shift of the Chinese market towards single-room proton therapy, plus new local competitors (e.g., Mevion in China), threaten IBA's pricing power and may pressure gross margins, thus impacting long-term revenue growth and profitability.
  
• Exposure to geopolitical risks-such as U.S. tariffs on European medical devices, Chinese procurement restrictions, and broader global trade tensions-may disrupt international sales, limit expansion opportunities, and increase costs, putting downward pressure on revenues and margins.
  
• Slower-than-expected market uptake in China due to regulatory action, anti-corruption policies, and purchasing restrictions means IBA cannot rely on Chinese growth to drive its long-term sales, limiting addressable market expansion and potentially stalling revenue growth.
  
• Customer-related delays and cost overruns (notably in major projects in Spain and Argentina) have resulted in notable margin pressure and increased working capital requirements; if persistent, these could depress free cash flow, net margins, and earnings visibility over time.
  
• The high capital expenditure required for adoption of proton therapy systems combined with potential reduction in reimbursement rates (e.g., "One Big Beautiful Bill" in the U.S.) may cause hospitals to hesitate in making investments, leading to longer sales cycles, unpredictability in order intake, and sluggish long-term revenue growth.

Valuation

• The analysts have a consensus price target of €16.667 for Ion Beam Applications based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €18.0, and the most bearish reporting a price target of just €14.5.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €652.4 million, earnings will come to €39.5 million, and it would be trading on a PE ratio of 15.1x, assuming you use a discount rate of 7.2%.
  
• Given the current share price of €12.06, the analyst price target of €16.67 is 27.6% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.