Detection Technology - Detecting new sources of growth
Underlying demand in the imaging markets remains strong but issues in the supply chain have restricted DT’s growth. We expect revenue and profitability to see solid development in 2023 with the completion of the R&D program. We retain our HOLD-rating and TP of EUR 20.0.
External factors still restricting DT’s full potential
MBU performed well during the whole pandemic time while decreased demand for aviation solutions caused a significant decline in SBU’s activity. Industrial clients started investments early during the pandemic and IBU has enjoyed a solid revenue growth since. The recovery of SBU has started but the revenue is still significantly lacking from the levels of 2019. Moreover, COVID-19 lockdowns in China have further restricted the availability of critical components, forcing DT and its clients to postpone their deliveries. Even though the lockdowns in China would ease, the “normal” component shortage is expected to continue.
R&D pipeline loaded with opportunities
DT initiated its R&D program in early 2022 to lower its exposure to the component shortage which eventually enables faster lead times and higher revenue growth. The company aims to renew its products so that the critical components with low availability can be replaced by the components with better availability. DT’s R&D pipeline provides a potential for future development as the usage of data-emphasized imaging increases in all its market segments. Furthermore, investments in multi-energy technology provide notable future potential when ME solutions commercialize.
HOLD with a target price of EUR 20.0
Supply chain issues and increasing cost inflation as well as geopolitical tenses have forced us to take a more conservative stance. However, we believe in DT’s long-term story given its growth potential and developing technology and thus we retain our HOLD-rating with a TP of EUR 20.0. Future earnings growth supports the stock’s upward development, but we see DT’s current valuation compared to its peers somewhat elevated, not providing a suitable moment for increasing the position in DT.
MBU performed well during the whole pandemic time while decreased demand for aviation solutions caused a significant decline in SBU’s activity. Industrial clients started investments early during the pandemic and IBU has enjoyed a solid revenue growth since. The recovery of SBU has started but the revenue is still significantly lacking from the levels of 2019. Moreover, COVID-19 lockdowns in China have further restricted the availability of critical components, forcing DT and its clients to postpone their deliveries. Even though the lockdowns in China would ease, the “normal” component shortage is expected to continue.
R&D pipeline loaded with opportunities
DT initiated its R&D program in early 2022 to lower its exposure to the component shortage which eventually enables faster lead times and higher revenue growth. The company aims to renew its products so that the critical components with low availability can be replaced by the components with better availability. DT’s R&D pipeline provides a potential for future development as the usage of data-emphasized imaging increases in all its market segments. Furthermore, investments in multi-energy technology provide notable future potential when ME solutions commercialize.
HOLD with a target price of EUR 20.0
Supply chain issues and increasing cost inflation as well as geopolitical tenses have forced us to take a more conservative stance. However, we believe in DT’s long-term story given its growth potential and developing technology and thus we retain our HOLD-rating with a TP of EUR 20.0. Future earnings growth supports the stock’s upward development, but we see DT’s current valuation compared to its peers somewhat elevated, not providing a suitable moment for increasing the position in DT.