C-RAD: Rolling with the Omicron punches - ABG

Omicron softens installations and orders in Q1’22e
Sales down 3-2% ’22-24e on FX and supply chain
High non-cyclical growth at 54% discount to peers

External conditions remain challenging
C-RAD is once again facing relatively challenging external conditions in Q1. During January, primarily the western healthcare systems were facing the high transmission of Omicron, which led to a cautious stance on equipment installations, with a large share of planned installations getting postponed into Q2 or later. Furthermore, we have learned that decisionmakers generally focused on more pressing COVID-related issues during that time, which had a negative effect on purchasing decisions. Hence, we expect this to have a negative effect on both orders and sales for Q1. The situation improved remarkably starting in mid-Q1, and we expect that conditions were strong from mid-February and continue to be supportive into Q2. However, we believe that there is a lead time until this improvement feeds into numbers and that the weakness during December and January will have an adverse effect on Q1 numbers, with the late-Q1 recovery feeding mostly into Q2 numbers. However, an offsetting factor to this recovery is the deteriorating situation in APAC that should result in a slowdown for that region. C-RAD has so far managed the supply chain situation well, but we believe that it was more challenging during March, as broadly indicated by Medtech industry peers, and we have hence factored in a c. 5% reduction in Q1 sales as a result.

Estimates slightly lower on FX and supply chain issues
We lower ‘22e sales by 3%, in large part due to FX, but also on potential adverse impacts from supply chain issues. The 2% decrease for ’23e-‘24e sales is mainly on the back of FX as we expect the supply chain issues to be significantly eased by the end of 2022.

Set for a 49% EBIT CAGR, at a 54% discount to peer group
With a 49% EBIT CAGR in ’20-’25e, C-RAD is one of the fastest growing companies in its peer group, while ...
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