C-RAD - Another court win versus former employee

Court rules in favor of C-RAD versus former employee… … for the fourth consecutive time Recent order momentum has been strong C-RAD wins in Patent and Market court On Thursday 1 July it was announced that the Swedish Patent and Market court had ruled in favour of C-RAD against a former employee. The resolution relates to a lawsuit filed forward by the former employee in May 2020, seeking compensation for an innovation made during employment. The courts verdict states that the former employee has no right to compensation and that the former employee should compensate C-RAD’s legal fees of SEK 2.9m. This is the fourth case with the former employee or the company Beamocular AB (now bankrupt), which is owned by the former employee.

Two of these disputes relate to the research and development of C-RAD’s positioning product and the other two relate to the now discontinued Gemini product. Fourth consecutive ruling in favour of C-RAD This announcement does not impact our estimates or our long-term view on C-RAD. However, it should be viewed as positive news for C-RAD as these ongoing disputes likely have been a potential concern for some Investors.

While the court decision may be appealed, the court ruling in favor of C-RAD for a fourth consecutive time should be considered yet another step towards leaving this dispute behind. Currently enjoying strong order momentum As the impact from the pandemic has started to ease C-RAD has performed well. The past three quarters has seen strong order momentum, with organic growth in order intake averaging 36%.

The company ended Q1’21 with the order backlog 30% higher versus one year ago. We forecast that C-RAD will achieve ’20-‘25e CAGR in net sales and EBIT of 15% and 41% respectively. On our current estimates, the share trades at ‘22e EV/Sales of 5.5x following today’s 6% positive share price reaction.

C-RAD will report its Q2 earnings on 29 July..