Boston, MA 09/19/2014 (wallstreetpr) – Investment advisor, Goldman Sachs Group Inc (NYSSE:GS), has provided key takeaways from the American Society of Radiation Oncology or ASTRO conference. It sees the environment in the U.S. as stable as far as overall radiation oncology market was concerned since there was no change in the number of treatment vaults compared to the last year.
Cautious Optimism
Analyst David Roman, who attended the conference, said that most of the companies management team expressed cautious optimism on the rate of linac replacements going forward since hospitals were expected to gain from ACA implementation and improving utilization rate. However, this was in consistent with its recent survey, in which hospital managements indicated that they expected to lift the CAPEX spend proportion on radiation oncology to 13% in the next year compared to 10.7% in the last year.
However, the analyst sees the story in the emerging markets as quite different since penetration paces were a fraction of the U.S. The brokerage has also acknowledged certain short-term disruption in some markets such as Russia and China. However, the analyst believes that the underlying trends support ongoing uptick.
Software Key Focus
Goldman Sachs Group Inc (NYSE:GS) analyst said that the current year’s ASTRO was focused on software with either Varian Medical Systems, Inc. (NYSE:VAR) nor ELEKTA BSHS ADR (OTCMKTS:EKTAY) unveiling any new equipment. The brokerage said that both the companies were targeting software as an available opportunity since physicians place higher importance on planning of treatment while hospitals remain focused on managing the care continuum.
Therefore, software provides an entirely fresh source of growth for the companies. Though this was a favorable development, the analyst said that it also depends on equipment growth in some of the geographies, which could be volatile. Roman said that Varian Medical Systems, Inc. (NYSE:VAR) expects to increase sales from software to $600 million or 25% of sales in three years from $300 million or 10% of sales currently.
Elekta Preferred
The brokerage sees Elekta as well placed due to its favorable geographic mix, margin improvement potential, and rebased expectations and retained its Buy rating on the shares of ELEKTA BSHS ADR (OTCMKTS:EKTAY). Goldman Sachs Group Inc (NYSE:GS) also retained its Neutral rating on Varian Medical Systems, Inc. (NYSE:VAR) shares.
