IBA Activity picks up, as do costs
IBA's 1H22 results last week highlighted strong momentum in operational activity, with the group selling a record number of OA systems in 1H22. Backlog conversion at PT was strong and in line with our estimates but disappointed on the OA front. Despite the strong sales growth, margins came in below expectations on the back of increased cost, which will likely continue to increase above inflation levels in 2023. We therefore believe we might have been too optimistic on the operating leverage effect in 2023 and 2024. As a result, we have adjusted our model and derive a new valuation of € 17.6 ps compared to € 20.5 ps previously. However, as we think it is likely that the Spanish deal will go through end-2022 or early 2023, we have added an extra positive effect to our DCF of € 1.3 ps. Adding things up, we derive a new TP of € 19.0 ps and stick to our Buy rating.IBA- Ion Beam Applications develops and markets technologies and pharmaceutical products for the healthcare sector, with a focus on cancer diagnosis and therapy. Co. is also engaged in the sterilization and ionization market. Co. operates in two primary business segments: Equipment and Pharmaceuticals. Co.'s Equipment segment encompasses development, fabrication, and services associated with medical and industrial particle accelerators, proton therapy systems, and a range of dosimetry products, while Co.'s Pharmaceuticals segment encompasses the production and distribution of radiopharmaceutical agents as well as its bioassay operations.
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