VRAY - ViewRay extends losses as Street downgrades after guidance cut

2023-04-14 08:26:06 ET

Following a ~39% selloff in the previous session, ViewRay ( NASDAQ: VRAY ) shares shed another ~3% in the pre-market trading Friday as three analysts downgraded the stock after the MedTech company slashed its 2023 outlook.

Disclosing preliminary Q1 2023 revenue that missed expectations Thursday, the maker of MRIdian MRI-guided radiation therapy system also announced plans to explore strategic alternatives yesterday, including a sale or merger.

Following the announcement, the analysts from BTIG and Stifel slashed their Buy ratings on VRAY to Neutral and Hold, respectively, while Oppenheimer cut its rating to Market Perform from Outperform.

BTIG analyst Marie Thibault included ongoing pressure on MRIdian installation and the company’s short cash runway among reasons for her downgrade.

“We are uncertain that VRAY will be able to quickly find a suitable acquirer/partner,” Thibault wrote.

“Any delays in a resolution are a negative in our view, since we do think there is some risk of orders falling out of backlog if customers become wary of working with a cash-strapped capital equipment company.”

Stifel analyst Rick Wise who trimmed his price target to $1.75 from $7.00, noted: “We feel more comfortable moving to the sidelines until we see more-visible signs of operational improvement, revenue reacceleration, and/or balance sheet fortification.”

Citing the near-term challenges, Stifel sets its 2023 forecasts on VRAY at the low end of the company’s guidance and significantly cuts its projections for 2024 and 2025.

Read: Issuing a Sell rating on ViewRay ( VRAY ), Seeking Alpha analyst Henrik Alex warned that the company is at risk of violating debt covenants later this year.

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