Salut tout le monde,
info chez Bolero ce matin
News:
Following IBA’s strong 1H15 report we revised our FY15 and FY16 forecast upwards. Buy rating and € 30/sh target price reiterated.
Management feedback during conference call:
IBA continues to see a stable proton therapy (PT) order pipeline. The overall opportunity stabilizes at $ 1bn value, 70% linked to ProteusOne where IBA sees a strong competitive advantage. In terms of geographies: a lot of opportunity in Asia, US, latam, while Europe is bit slowing down. 70% of PT installations come from US and Asia. The treatment room potential is 2,671 worldwide, of which today 141 rooms. YTD the number of rooms ordered is 40 globally. IBA and Varian have an equal number of orders (6 each) though Varian has recorded double as much rooms as IBA had several ProteusOne systems. IBA believes that many of contracts of Varian are 'financing'-driven and will require a lot of development (meaning that IBA believes that Varian will not meet the timelines), while IBA believes it has high value contracts and can deliver on the project management promise. The evolution of Medicare reimbursement in 2016 looks promising after a hiccup a few year ago. For IBA, ProteusOne is a key driver of growth with 11 systems sold today (2 US, 6 EU, 3 Japan).
The PT&Accelerator REBITDA margin saw a 100 bps drop vs 1H14 and 300bps lost versus 2H14, due to a mix of elements. Price pressure: competition has won some of the tenders, but while IBA resisted to engage in price cuts, it doesn’t mean they did not felt an impact. Other elements are a high level of Sales&Marketing coming from the very intense period of preparing tender offers, and investments in R&D.
There was a positive € /$ FX impact, mainly on dosimetry which saw an 8% FX benefit. PT & accelerators are covered by Fx contracts, so limited impact.
Despite the positive top-line and upwards revised guidance, the margin guidance has not been altered. Management stated they prefer to develop the market rather than over-maximizing the margin, hence continue to investing in R&D and M&S, preferring this over short term operational leverage. In terms of sales, IBA is bullish on the PT outlook for the market as they see opportunities in many regions such as Asia and LatAm. Management cautioned on ‘Other Accelerators’ that one should not anticipate the current growth going forward as the numbers were boosted by Cyclotron70 sales which impacted H1 numbers significantly.
Conclusion:
We are confident on the PT business which looks to stabilize at a $ 1bn opportunity for IBA, of which 70% linked to ProteusOne. Dosimetry is expected to be strong, though there is caution on the growth on Other Accelerators. The FY15 uplift of the revenue guidance seems an easy achievable. We increased our top-line estimates to € 255m (from € 243m) for FY15 and for FY16 to € 281 (from € 268). With an EBIT margin of 10.5% for FY15 and 11.2% for FY16, this leads to a 41% EPS increase for FY15 and 15% for FY16. At the day of the results, we increased our TP to € 30 (from € 27), reiterating our BUY rating.
