ARAY - Accuray Getting Very Little Love Ahead Of A Coming Revenue Ramp

2024-04-07 00:25:02 ET

Summary

• Despite management guidance that points to significant revenue acceleration in the next two quarters, Accuray shares have languished.
• Market skepticism can be tied in part to the company's track record - despite multiple efforts to improve its portfolio and go-to-market strategy, market share growth has been very modest.
• The company's entry into China's Type B market could be its last best chance to change the narrative - meaningful share in a $600M/year market should be transformative.
• Accuray faces tough competition from Varian and Elekta, but is focusing on upgrading its installed base, targeting selective vault share gain opportunities, and pursuing value-based opportunities in emerging markets.
• Accuray shares should trade closer to $4-$6, but Accuray must deliver on the potential of the Chinese market and establish new, higher, expectations for growth and margins.

Accuray (ARAY) is certainly in the running for being one of the most frustrating stocks I’ve followed. While the company has made a lot of smart moves to improve its product portfolio and boost its growth prospects, market share has been frustratingly slow to follow and the stock has languished for years as the company hasn’t been able to really close much of the gap with Varian (owned by Siemens Healthineers ( OTCPK:SMMNY )) or Elekta ( OTCPK:EKTAY ). Since my last update , despite two relatively decent quarters, the shares are down another 20% without any obvious negative catalysts....

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