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Here's Why You Should Retain Accuray (ARAY) Stock for Now
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Accuray Incorporated (ARAY - Free Report) is well-poised for growth in the coming quarters, courtesy of continued solid demand for its products. The optimism, led by robust international performance in third-quarter fiscal 2024 performance and potential in Precision Treatment Planning System (TPS), is expected to contribute further. However, overdependence on technologies and stiff competition are concerning.
This Zacks Rank #3 (Hold) company has lost 46.3% year to date against 4.8% growth of the industry. The S&P 500 has witnessed 11.7% growth in the said time frame.
The renowned radiation oncology company has a market capitalization of $275.7 million. Accuray projects 87.5% growth for fiscal 2025 and expects to maintain its strong performance going forward. The company has a P/S ratio of 0.4 compared with the industry’s 3.5.
Image Source: Zacks Investment Research
Let’s delve deeper.
Solid Product Demand: Sales of Accuray’s products and services were dampened during the fiscal third quarter due to lower shipments during the period. However, sales are likely to have improved in the fourth quarter due to delayed shipments during the third quarter that might have been included in the to-be-reported quarter.
Service revenues are also likely to have improved, backed by higher installations. The company is witnessing sustained momentum for its products’ sales on the back of strong global demand.
Meanwhile, Accuray announced an agreement with TrueNorth Medical Physics to offer services, which are complementary and supplementary to the those provided by Accuray. These services will act as an extension of the hospital team. This, in turn, should enable hospitals to ensure that they have the staffing necessary to meet the treatment goals for patients, whether remotely, on-site, or in a hybrid workspace.
Potential in Precision TPS: We are optimistic about the Accuray Precision TPS, which offers an efficient way for clinicians to create high-quality radiation therapy treatment plans for various cases. It includes features such as multi-modality image fusion with a unique deformable image registration algorithm, a comprehensive set of contouring tools and options for AutoSegmentation auto contouring for specific body areas.
In June, the systemreceived approval in China. This is likely to have brought in additional revenues in the fiscal fourth quarter.
Strong Q3 Results: Although Accuray’s sales were below market expectations during the third quarter of fiscal 2024, its performance was strong in the EIMEA (Europe, India, the Middle East and Africa) region, driven by fast-growing emerging markets and the APAC region. The expansion in the global installed base looks promising. An uptick in gross orders is also encouraging.
On the third-quarter earnings call, management confirmed that it is continuing with its early market launch efforts for Helix (Accuray’s non-China access product) in India.
The company is currently awaiting regulatory approval for the full market launch, which is expected by the calendar year-end 2024. Also, the company has received regulatory approval to market the Tomo C equipment in China. These raise our optimism about the stock.
Downsides
Tough Competition: Rapid technological advancements and fierce rivalry characterize the medical device sector in general and the non-invasive cancer treatment sector in particular.
Accuray needs to convince physicians and other healthcare decision-makers about the benefits of its products and technology. To compete successfully, the company has to highlight the advantages of its products over other well-established alternatives.
Overdependence on Technologies: Achieving consumer and third-party payor acceptance of the CyberKnife and TomoTherapy platforms as preferred methods of tumor treatment is crucial to Accuray’s continued success. If ARAY’s products do not receive significant market acceptance among consumers and healthcare payors despite spending substantial time and money on their education, it can weigh on the company’s performance.
Estimate Trend
Accuray has been witnessing a stable estimate revision trend for fiscal 2024. Over the past 60 days, the Zacks Consensus Estimate for earnings has remained stable at a loss of 16 cents per share.
The Zacks Consensus Estimate for fourth-quarter fiscal 2024 revenues is pegged at $122.8 million, suggesting a 3.8% improvement from the year-ago reported number.
Some better-ranked stocks in the broader medical space that have announced quarterly results are Universal Health Services (UHS - Free Report) , Boston Scientific (BSX - Free Report) and Cellectar Biosciences (CLRB - Free Report) .
UHS’ earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.58%.
Its shares have rallied 39.2% year to date compared with the industry’s 30.8% growth.
Boston Scientific, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 12.6%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.18%.
Boston Scientific’s shares have risen 27.6% year to date compared with the industry’s 3.2% growth.
Cellectar Biosciences, carrying a Zacks Rank of 2 at present, has an estimated growth rate of 42.5% for 2024. CLRB’s earnings missed estimates in three of the trailing four quarters and beat the same once, the negative average surprise being 21.01%.
Cellectar Biosciences’ shares have lost 30.3% year to date against the industry’s 5.5% improvement.
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Here's Why You Should Retain Accuray (ARAY) Stock for Now
Accuray Incorporated (ARAY - Free Report) is well-poised for growth in the coming quarters, courtesy of continued solid demand for its products. The optimism, led by robust international performance in third-quarter fiscal 2024 performance and potential in Precision Treatment Planning System (TPS), is expected to contribute further. However, overdependence on technologies and stiff competition are concerning.
This Zacks Rank #3 (Hold) company has lost 46.3% year to date against 4.8% growth of the industry. The S&P 500 has witnessed 11.7% growth in the said time frame.
The renowned radiation oncology company has a market capitalization of $275.7 million. Accuray projects 87.5% growth for fiscal 2025 and expects to maintain its strong performance going forward. The company has a P/S ratio of 0.4 compared with the industry’s 3.5.
Image Source: Zacks Investment Research
Let’s delve deeper.
Solid Product Demand: Sales of Accuray’s products and services were dampened during the fiscal third quarter due to lower shipments during the period. However, sales are likely to have improved in the fourth quarter due to delayed shipments during the third quarter that might have been included in the to-be-reported quarter.
Service revenues are also likely to have improved, backed by higher installations. The company is witnessing sustained momentum for its products’ sales on the back of strong global demand.
Meanwhile, Accuray announced an agreement with TrueNorth Medical Physics to offer services, which are complementary and supplementary to the those provided by Accuray. These services will act as an extension of the hospital team. This, in turn, should enable hospitals to ensure that they have the staffing necessary to meet the treatment goals for patients, whether remotely, on-site, or in a hybrid workspace.
Potential in Precision TPS: We are optimistic about the Accuray Precision TPS, which offers an efficient way for clinicians to create high-quality radiation therapy treatment plans for various cases. It includes features such as multi-modality image fusion with a unique deformable image registration algorithm, a comprehensive set of contouring tools and options for AutoSegmentation auto contouring for specific body areas.
In June, the systemreceived approval in China. This is likely to have brought in additional revenues in the fiscal fourth quarter.
Strong Q3 Results: Although Accuray’s sales were below market expectations during the third quarter of fiscal 2024, its performance was strong in the EIMEA (Europe, India, the Middle East and Africa) region, driven by fast-growing emerging markets and the APAC region. The expansion in the global installed base looks promising. An uptick in gross orders is also encouraging.
On the third-quarter earnings call, management confirmed that it is continuing with its early market launch efforts for Helix (Accuray’s non-China access product) in India.
The company is currently awaiting regulatory approval for the full market launch, which is expected by the calendar year-end 2024. Also, the company has received regulatory approval to market the Tomo C equipment in China. These raise our optimism about the stock.
Downsides
Tough Competition: Rapid technological advancements and fierce rivalry characterize the medical device sector in general and the non-invasive cancer treatment sector in particular.
Accuray needs to convince physicians and other healthcare decision-makers about the benefits of its products and technology. To compete successfully, the company has to highlight the advantages of its products over other well-established alternatives.
Overdependence on Technologies: Achieving consumer and third-party payor acceptance of the CyberKnife and TomoTherapy platforms as preferred methods of tumor treatment is crucial to Accuray’s continued success. If ARAY’s products do not receive significant market acceptance among consumers and healthcare payors despite spending substantial time and money on their education, it can weigh on the company’s performance.
Estimate Trend
Accuray has been witnessing a stable estimate revision trend for fiscal 2024. Over the past 60 days, the Zacks Consensus Estimate for earnings has remained stable at a loss of 16 cents per share.
The Zacks Consensus Estimate for fourth-quarter fiscal 2024 revenues is pegged at $122.8 million, suggesting a 3.8% improvement from the year-ago reported number.
Accuray Incorporated Price
Accuray Incorporated price | Accuray Incorporated Quote
Key Picks
Some better-ranked stocks in the broader medical space that have announced quarterly results are Universal Health Services (UHS - Free Report) , Boston Scientific (BSX - Free Report) and Cellectar Biosciences (CLRB - Free Report) .
Universal Health Services, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 19%. You can see the complete list of today’s Zacks #1 Rank stocks here.
UHS’ earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.58%.
Its shares have rallied 39.2% year to date compared with the industry’s 30.8% growth.
Boston Scientific, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 12.6%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.18%.
Boston Scientific’s shares have risen 27.6% year to date compared with the industry’s 3.2% growth.
Cellectar Biosciences, carrying a Zacks Rank of 2 at present, has an estimated growth rate of 42.5% for 2024. CLRB’s earnings missed estimates in three of the trailing four quarters and beat the same once, the negative average surprise being 21.01%.
Cellectar Biosciences’ shares have lost 30.3% year to date against the industry’s 5.5% improvement.