Accuray Incorporated ( ARAY Quick Quote ARAY - Free Report) has been gaining on the back of strong demand for its products. A solid third-quarter fiscal 2022 performance, along with a few positive study outcomes, is expected to contribute further. However, overdependence on technologies and reimbursement uncertainties persist.
Over the past year, this Zacks Rank #2 (Buy) stock has lost 50.7% compared with 25.8% fall of the
industry and 13% decline of the S&P 500 composite.
The renowned radiation oncology company has a market capitalization of $191.2 million. Accuray projects 144.4% growth for fiscal 2023, in which it expects to maintain its strong performance. The company’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, missed the same in one and broke even in the other, the average surprise being 12.5%.
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Let’s delve deeper.
Strong Product Demand: We are upbeat about Accuray’s products registering robust customer adoption over the past few months. During the fiscal 2022 third-quarter earnings call in April, the company confirmed that its top line reflected strong customer demand for ClearRT Helical kVCT Imaging for the Radixact System and VOLO Ultra enhancement to the Accuray Precision treatment planning system for the Radixact System and the CyberKnife S7 platform. The company also continued to witness robust customer demand for both CyberKnife S7 and Radixact TomoTherapy platforms. Positive Study Outcomes: Accuray has been witnessing favorable study outcomes for its products over the past few months, raising our optimism. This month, the company announced new positive clinical studies, which reinforce the value of the company's CyberKnife platform in the treatment of neurological indications with non-invasive radiosurgery.
Accuray, in May, announced that clinical studies continue to validate the versatility of its CyberKnife and TomoTherapy platforms, including the next-generation Radixact System, to accurately and efficiently treat a wide variety of indications of all complexities.
Strong Q3 Results: Accuray’s narrower-than-expected loss per share in third-quarter fiscal 2022 buoys optimism. Favorable phase III trial data regarding Accuray TomoTherapy Helical Radiotherapy System and positive 10-year data about Accuray CyberKnife System are encouraging. Uptick in gross orders during the reported quarter is also encouraging. Downsides Overdependence on Technologies: Consumer and third-party payor acceptance of the CyberKnife and TomoTherapy platforms as preferred methods of tumor treatment are crucial to Accuray’s continued success. Physicians will not begin to use or increase the use of CyberKnife or TomoTherapy platforms unless they determine, based on experience, clinical data and other factors, that the two platforms are safe and effective alternatives to traditional treatment methods. Reimbursement Uncertainties: Accuray’s customers rely significantly on reimbursement from public and private third-party payors for the CyberKnife and TomoTherapy platform procedures. The company’s ability to commercialize its products successfully and increase market acceptance of the same will significantly depend on the extent to which public and private third-party payors provide adequate coverage and reimbursement for procedures performed with Accuray’s products. Estimate Trend
Accuray is witnessing a positive estimate revision trend for fiscal 2022. In the past 90 days, the Zacks Consensus Estimate for its loss per share has narrowed from 14 cents to a loss of 9 cents.
The Zacks Consensus Estimate for the company’s fourth-quarter fiscal 2022 revenues is pegged at $104.9 million, suggesting a 5.5% decline from the year-ago quarter’s reported number.
A few other stocks in the broader medical space that investors can consider are
AMN Healthcare Services, Inc. ( AMN Quick Quote AMN - Free Report) , Patterson Companies, Inc. ( PDCO Quick Quote PDCO - Free Report) and Becton, Dickinson and Company ( BDX Quick Quote BDX - Free Report) , popularly known as BD.
AMN Healthcare, flaunting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.6%.
You can see
the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has gained 15.7% against the
industry’s 33.2% fall in the past year.
Patterson Companies, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 9.6%. PDCO’s earnings surpassed estimates in all the trailing four quarters, the average beat being 16.5%.
Patterson Companies has lost 3% compared with the
industry’s 11.7% fall over the past year.
BD, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 6.6%. BDX’s earnings surpassed estimates in all the trailing four quarters, the average beat being 12.9%.
BD has lost 3.7% compared with the industry’s 11.7% fall over the past year.