Accuray Cut to Neutral - Analyst Blog
May 19 2011 - 11:16AM
Zacks
We downgrade our recommendation for leading radiosurgery systems
maker Accuray Incorporated (ARAY) to Neutral
following our assessment of its lukewarm third-quarter fiscal 2011
results which missed the Zacks Consensus Estimates. The company
turned in a
loss for the quarter as higher revenues were more than
offset by hefty acquisition charges.
Sales rose 5% year over year in the quarter owing to higher
product and service revenues. The California-based company once
again backed its revenue forecast for fiscal 2011, which is
expected between $210 million and $225 million.
Accuray is a global leader in the field of radiosurgery and
provides a non-surgical treatment option for patients diagnosed
with cancer. The company continues to enjoy healthy demand for its
CyberKnife robotic radiosurgery systems. More than 100,000 people
have been already treated with CyberKnife globally. Accuray booked
13 orders for the device in the third quarter.
Accuray’s CyberKnife system boasts of a technology that
differentiates it from traditional treatments. CyberKnife, a
non-invasive alternative to conventional surgery, is the first and
only commercially available intelligent robotic radiosurgery system
designed to treat solid tumors anywhere in the body.
The company is pursuing a number of strategies to boost
CyberKnife’s adoption. As part of these efforts, it has formed a
new functional organization dubbed “Medical Affairs” in an effort
to boost data collection and utilization of the device.
Accuray is expected to benefit from the recent recovery in
hospital capital equipment spending. Moreover, the company is well
placed to bolster its foothold in the radiation oncology market
with its acquisition of rival TomoTherapy
(TOMO).
However, Accuray remains susceptible to reimbursement
uncertainties surrounding its products and its CyberKnife system
faces stiff challenge from competitive product offerings of
Varian Medical (VAR).
Moreover, a sizable sales deficit (resulting from lower deferred
revenues from the CyberKnife systems sold under the legacy Platinum
multi-year service plan) may be a drag on the top and bottom lines
for fiscal 2011.
ACCURAY INC (ARAY): Free Stock Analysis Report
TOMOTHERAPY INC (TOMO): Free Stock Analysis Report
VARIAN MEDICAL (VAR): Free Stock Analysis Report
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