EKTA B: Future Outlook Balances Mixed Ratings With Product Adoption Progress

Analysts lifted their fair value estimate for Elekta to SEK 58.27 from SEK 56.77, reflecting a higher assumed future P/E and recent Street research, where one firm raised its price target to SEK 60 while another turned more cautious on the shares.

Analyst Commentary

Bullish Takeaways

Bullish analysts see the higher SEK 60 price target as better aligned with the updated fair value estimate, which now builds in a higher assumed P/E multiple.
The recent target move to SEK 60 suggests confidence that current execution can support the revised valuation framework, even without assuming specific growth rates.
Supportive views highlight that recent research is at least comfortable keeping a neutral stance on the shares while still lifting valuation assumptions, which some readers may see as a sign of underlying business resilience.
For investors focused on valuation, the combination of a higher fair value estimate and a SEK 60 target provides a clearer reference point for how the market could price Elekta under steady operational performance.

Bearish Takeaways

Bearish analysts have turned more cautious on the shares, which can signal concern around the company’s ability to fully justify a richer P/E multiple through execution.
The downgrade highlights that, even with higher valuation markers such as the SEK 60 target, some analysts question whether the risk and reward are balanced at current levels.
Cautious views may reflect worries that any stumble in project delivery, order trends, or margin management could weigh more heavily now that valuation assumptions are higher.
For readers, the split between bullish and bearish analysts underscores that Elekta’s story is sensitive to how consistently the company executes against expectations baked into the new fair value and target levels.

What's in the News

Elekta plans an Analyst and Investor Day to discuss detailed financial plans and targets, giving you a closer look at management’s medium term priorities and focus areas (Key Developments).
Elekta announced that its Elekta Evo CT Linac has received 510(k) clearance from the U.S. Food and Drug Administration, making the system available to radiation oncology professionals in the United States (Key Developments).
The Elekta Evo CT Linac uses Iris high definition, AI enhanced imaging designed to give clinicians clearer views of tumors and organs at risk for each treatment fraction, which may matter for physicians comparing treatment platforms (Key Developments).
Elekta reports that Evo is gaining traction in Europe and other countries as more clinics adopt its treatment capabilities, which gives context for how the product is being taken up outside the U.S. (Key Developments).

Valuation Changes

Fair Value: SEK 58.27 compared with SEK 56.77 previously, representing a modest upward adjustment in the modelled valuation level.
Discount Rate: now 6.59% versus 6.49% before, indicating a slight increase in the required return used in the analysis.
Revenue Growth: now 4.81% compared with 5.26% previously, reflecting a small step down in the assumed top line expansion rate.
Profit Margin: now 8.94% versus 9.33% before, reflecting a slightly lower assumed profitability level.
Future P/E: now 15.29x compared with 13.69x previously, showing a clear move higher in the valuation multiple applied to future earnings.

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Key Takeaways

Successful software launches and service expansion are boosting sales growth, margins, and predictable cash flow, especially as global adoption of precision radiotherapy accelerates.
Market recovery in China and emerging regions, supported by cost control and strong cancer treatment demand, positions Elekta for sustained earnings and multi-year revenue growth.
Margin and earnings outlook is pressured by tariff and FX headwinds, weak order trends, regional uncertainty, rising costs, and intensifying competitive and regulatory challenges.

Catalysts

About Elekta

A medical technology company, provides clinical solutions for treating cancer and brain disorders in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.What are the underlying business or industry changes driving this perspective?

Continued strong momentum and successful launches of Elekta Evo and Elekta ONE software in Europe are driving double-digit sales growth and gross margin improvement in the region; this suggests that further global rollouts of these advanced solutions, aligned with increasing demand for precision radiotherapy, may accelerate overall revenue and margin expansion as adoption broadens.
Rebuilding of the order backlog and anticipated return to growth in China in the second half of the fiscal year, underpinned by Elekta's leading market position and government-supported cancer programs, points to renewed access to a large addressable market and significant top-line growth potential.
Expansion of high-margin service and software recurring revenue, evidenced by consistent 4% service growth and increasing software traction, adds predictable cash flow and supports higher net margins as more customers attach ongoing digital and planning solutions to hardware sales.
Cost rationalization measures-including SG&A reductions and supply chain productivity enhancements-are actively offsetting headwinds from tariffs and FX, putting Elekta on a path to regain pre-pandemic gross margin and EBIT margin levels, thereby supporting medium-term earnings recovery.
A rising global cancer burden from aging populations, combined with infrastructure growth in emerging markets like India and China, ensures a sustained, long-term demand backdrop for advanced radiotherapy solutions-underpinning a multi-year revenue growth profile for Elekta if current valuation discounts this opportunity.

Elekta Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Elekta's revenue will grow by 4.8% annually over the next 3 years.
Analysts assume that profit margins will increase from -0.2% today to 8.9% in 3 years time.
Analysts expect earnings to reach SEK 1.8 billion (and earnings per share of SEK 4.61) by about April 2029, up from -SEK 40.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting SEK2.5 billion in earnings, and the most bearish expecting SEK1.3 billion.
In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 15.3x on those 2029 earnings, up from -534.0x today. This future PE is lower than the current PE for the GB Medical Equipment industry at 24.2x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.59%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

Ongoing and increasing tariff and FX headwinds are putting significant pressure on Elekta's gross margin and EBIT margin, and while management is taking action through pricing and cost optimization, there is limited ability to pass on price increases to existing backlog orders, directly impacting net margins and earnings.
Order softness and delayed revenue recognition in two historically high-margin regions (the U.S. and China) due to FDA approval delays for new products and a thin order backlog in China could result in weaker top-line growth and sustained regional revenue/margin volatility.
Elekta's guidance and growth outlook rely heavily on an eventual recovery in China and strong momentum in Europe, but both regions face risks: China's recovery is based on a still-rebuilding order book and unpredictable macro/policy factors, and European growth may not be sustainable at current high levels, leading to risk for both revenue stability and forward-looking cash generation.
Increasing net R&D costs, coupled with a declining trend in R&D capitalization rates, may limit margin improvement in the medium term, particularly if gross margin pressure from FX and tariffs persists and if innovation spending does not translate quickly enough into profitable new products.
Market dynamics such as greater buyer consolidation, continued regulatory/regional uncertainty (notably around U.S. approvals), and heightened global pricing competition (including from Asian entrants) may compress Elekta's future net margins and challenge currently anticipated earnings expansion.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of SEK58.27 for Elekta 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 SEK100.0, and the most bearish reporting a price target of just SEK39.0.
In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be SEK19.7 billion, earnings will come to SEK1.8 billion, and it would be trading on a PE ratio of 15.3x, assuming you use a discount rate of 6.6%.
Given the current share price of SEK55.9, the analyst price target of SEK58.27 is 4.1% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
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.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

European Launches And Chinese Recovery Will Expand Precision Radiotherapy Adoption