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[Idea note] - RaySearch: Breakthrough Quarter Sets Stage for Major Upside

Elementa believes that RaySearch Laboratories has delivered a transformational Q1 2025 performance, signaling...

Author

Kristoffer Lindström
June 18, 2025

Idea note

This is an Idea note; It’s a collection of early signals – companies mentioned in fund letters, blogs, or by sharp investors online. Not a full pitch, just a starting point for ideas that might be worth a more in-depth look.

RaySearch Delivers Record Q1 Results, Positioned for Stock Price Doubling

Idea source: Elementa

Price: 300 SEK (2025-06-16)

RaySearch Laboratories AB (RAYB) - Swedish medical technology company developing innovative software solutions for radiation therapy and cancer treatment, listed on Nasdaq Stockholm.

Ticker: RAYB | Timeframe: 12-18 months | 📈 Bullish

Elementa believes that RaySearch Laboratories has delivered a transformational Q1 2025 performance, signaling a new growth phase for the leader in radiation therapy software. The fund finds that the company’s record revenue growth of 29% organically, along with operating margin expansion to 22.6% (29% excluding currency effects), demonstrates the scalability of RaySearch’s business model. Elementa identifies the 72% surge in order intake as particularly compelling, driven by major wins, including a SEK 77 million order from China’s Heyou Hospital. The fund notes that the stock’s 30% jump on report day reflects just the beginning of the revaluation, with at least a doubling of the share price expected based on the company’s strengthened competitive position and margin expansion trajectory.

  • Strong Market Position: RaySearch holds 50% market share in proton therapy software and serves over 1,100 radiation therapy clinics globally.

  • Latest Development: Record Q1 2025 with SEK 331.7M revenue (+29% organic), SEK 74.8M operating profit (+63%), and SEK 409.6M order intake (+72%).

  • Reason for Mispricing: Market undervalued the company’s margin expansion potential and recurring revenue quality before the breakthrough quarter.

  • Timing Catalyst: RayStation v2025 launch with AI-powered treatment planning and major contract wins in China market.

  • Value Catalysts: Growing cancer treatment market (55% case growth by 2040), proton therapy market expanding at 13% CAGR, and recurring revenue model.

  • Valuation: Trading at 28x NTM EV/EBIT, slightly above its one-year mean.

  • Upside Potential: Elementa targets minimum 100% stock price appreciation based on margin expansion to target 25%+ by 2026.

  • Key Risks: High valuation multiples, competitive pressure from hardware manufacturers, currency exposure, and regulatory changes

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