We maintain our Neutral recommendation on Accuray Incorporated (ARAY) following its second-quarter fiscal 2012 results.
Its adjusted loss per share of 10 cents was narrower than the Zacks Consensus Estimate for a loss of 19 cents. Revenues (of $106.4 million) were also ahead of the Zacks Consensus Estimate.
Accuray recorded solid growth in new system orders in the second quarter. The California-based company raised its revenue (on a reported basis) forecast for fiscal 2012, which is now expected between $411 million and $426 million.
Accuray is a global leader in the field of radiosurgery and provides a non-surgical treatment option for patients diagnosed with cancer. More than 200,000 people have been treated with the company’s technology globally. The company continues to enjoy healthy demand for its CyberKnife radiosurgery systems and is pursuing a number of strategies to boost the device’s adoption.
Medical centers across the globe continues to adopt the company’s innovative radiosurgery and radiation therapy systems thanks to the growing demand for effective radiation oncology treatments in emerging growth markets.
The acquisition of TomoTherapy has bolstered Accuray’s foothold in the radiation oncology space. The merger marked the union of TomoTherapy’s best-in-class radiation therapies and Accuray’s popular radiosurgery systems to create a leading player in this market. Besides expanding its global reach, the acquisition has provided a major boost to Accuray’s sales. The company expects the transaction to be accretive to its earnings in fiscal 2012.
Accuray is expected to benefit from the gradual recovery in hospital capital equipment spending. However, the company remains susceptible to reimbursement uncertainties surrounding its products, and its CyberKnife system faces stiff challenges from competitive product offerings of Varian Medical (VAR). We also account for the integration risks associated with the TomoTherapy acquisition. Accuray currently retains a short-term Zacks #2 Rank (Buy).
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