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Accuray TomoTherapy System Starts Cancer Treatment in Africa

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Headquartered in Sunnyvale, CA, Accuray Inc. (ARAY - Free Report) recently announced that the Radiotherapy and Medical Oncology Center of Sidi Abdellah, Algeria has finally initiated cancer treatment with the company’s flagship TomoTherapy system.

Furthermore, the Radiotherapy and Medical Oncology Center announced the purchase of the company’s CyberKnife M6 system, which is scheduled to be installed by 2018-end.

Notably, Accuray’s top-line growth is highly leveraged on CyberKnife and TomoTherapy system sales. Per management, with the combined availability of CyberKnife and TomoTherapy in one location, the Center will be able to provide ‘highly precise’ radiation therapy in Algeria.

The latest development has been realized in accordance with the postulates of the Algerian Cancer Plan 2015–2019 that aims to improve the quality of radiotherapy, ease out the registration procedure of appointments and focus exclusively on the safety of care in radiotherapy. In fact, TomoTherapy can deliver safe treatment to a wide range of tumor types while keeping the surrounding tissues healthy.

Stock Price & Estimate Revision Trend

Accuray has had an impressive run on the bourse on a year-to-date basis. The company gained roughly 7%, higher than the Zacks categorized Medical instruments sub-industry’s addition of almost 5%. Moreover, the current level compares favorably with the S&P 500’s return of 6% over the same time frame. This, together with a long-term expected earnings growth rate of 15%, instills confidence in investors.

Furthermore, the estimate revision for the stock has been favorable. The year has seen one estimate move north over the last two months, compared with no movement in the opposite direction. As a result, the full-year estimates narrowed down by a penny to a loss of 15 cents over the same time frame.

Driven by the bullish analyst sentiments, Accuray carries a Zacks Rank #2 (Buy), signifying probabilities of outperformance in the near term.

Bottom line

We are highly upbeat about the bountiful opportunities in the radiotherapy market of the Middle East and Africa. A research report by MarketDataForecast projects that the niche markets are set to reach a worth of $650.29 million by 2021, growing at a CAGR of 5.8%.

However, both TomoTherapy and CyberKnife systems involve significant capital spending, which many healthcare providers are reluctant to spend, courtesy of the sluggish macro-economic conditions. Both the systems have long sales and implementation cycles, escalating the concerns for Accuray.

Other Key Picks

Other top-ranked stocks in the broader medical sector include Inogen Inc. (INGN - Free Report) , Hologic, Inc. (HOLX - Free Report) and Sunshine Heart Inc . Notably, all the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Inogen has a long-term expected earnings growth rate of 17.50%. The stock represents an impressive one-year return of 52.9%.

Hologic has a long-term expected earnings growth rate of 11.33%. The stock has a stellar one-year return of roughly 18.3%.

Sunshine Heart posted a positive earnings surprise of 58.24% in the last reported quarter. The stock has a stellar EPS growth record (last 3–5 years of actual earnings) of almost 22%.

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