Accuray Upgraded to Neutral - Analyst Blog
March 22 2013 - 2:33PM
Zacks
On Mar 20, we upgraded our recommendation on Accuray
Inc. (ARAY) to Neutral from Underperform. Despite posting
wider losses in the second quarter of fiscal 2013, the company
managed to beat both earnings and revenue estimates.
Why the Upgrade?
Accuray’s second-quarter fiscal 2013 adjusted loss of 30 cents
per share was narrower than the Zacks Consensus Estimate of a loss
of 34 cents. Adjusted revenues of $77.7 million beat the Zacks
Consensus Estimate by $3.7 million, despite a 24.5% decline from
the prior year. The results surpassed the guidance provided by the
company in January on the back of solid service revenues.
Following the release of the quarterly results, the Zacks
Consensus Estimate for loss per share for both fiscal 2013 and 2014
remained unchanged at 90 cents and 27 cents, respectively. With the
Zacks Consensus Estimates for both fiscal years showing no clear
directional pressure on the stock in the near term, the company now
has a Zacks Rank #3 (Hold).
Despite a decline in product revenues at an alarming rate, solid
revenues from services are keeping the company afloat.
Additionally, we are upbeat about the compelling prospect in
radiation oncology rendered by TomoTherapy. New products and
service margin expansion are expected to be tailwinds for the
company.
However, management cited certain internal issues that delayed
the launch of the company’s latest technologies and widened its
losses. In an effort to remediate the shortfall, Accuray announced
a major restructuring program and issued convertible notes to
strengthen its balance sheet, which appears to be encouraging.
Other Stocks to Consider
Medical instrument companies such as Cyberonics
(CYBX), Given Imaging (GIVN) and
Abiomed (ABMD) are worth considering. While
Cyberonics and Given Imaging carry a Zacks Rank #1 (Strong Buy),
Abiomed carries a Zacks Rank #2 (Buy).
ABIOMED INC (ABMD): Free Stock Analysis Report
ACCURAY INC (ARAY): Free Stock Analysis Report
CYBERONICS INC (CYBX): Free Stock Analysis Report
GIVEN IMAGING (GIVN): Free Stock Analysis Report
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