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Here's Why You Should Hold Accuray Stock in Your Portfolio for Now
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Key Takeaways
ARAY's Q3 FY25 revenues rose 12% on strong demand, with unit sales up 23% and product revenues up 16%.
ARAY's CyberKnife System posted 50% growth, driven by rising global use and China regulatory approval.
ARAY's product orders dropped 20%, cutting backlog to $452M and lowering book-to-bill ratio to 1.2x.
Accuray Incorporated (ARAY - Free Report) is well-poised for growth in the coming quarters, courtesy of continued robust demand for its products. The optimism, led by robust global performance in the third quarter of fiscal 2025 and potential in the Radiosurgery Market, is expected to contribute further. However, reimbursement uncertainties and challenges related to tariff impacts are concerning.
This Zacks Rank #3 (Hold) company has lost 31.3% in the year-to-date period compared with an 10.8% decline in the industry. The S&P 500 has witnessed 6.5% growth in the said time frame.
The renowned radiation oncology company has a market capitalization of $139.1 million. Accuray predicts 106.3% earnings growth for fiscal 2025 and anticipates maintaining its strong performance going forward. The company has a P/S ratio of 0.3X compared with the industry’s 2.5X.
Image Source: Zacks Investment Research
Reasons Favoring Accuray’s Growth
Solid Product Demand Driving Growth: Accuray’s third-quarter fiscal 2025 results show strong and steady demand for its advanced radiation therapy systems, with total net revenues rising 12% year over year to $113.2 million and product revenues climbing 16% to $57 million, driven by a 23% jump in unit sales. Solid demand across both developed and emerging markets, along with a broad product mix and a book-to-bill ratio of 1.2x, points to strong revenue potential.
With a $452 million backlog and no canceled orders, customer confidence remains solid, backed by a mix of new purchases and replacements for older systems. Management emphasized that product revenues are growing faster than the market, while the service segment, which makes up nearly half of total revenues, continues to support margins and drive sustainable growth.
Strength in CyberKnife System: Accuray’s CyberKnife System, a robotic radiosurgery platform with more than 20 years of clinical backing, is designed to treat tumors throughout the body, especially in the head, skull base and spine. The system’s high precision, enabled by Synchrony real-time tumor tracking and ClearRT imaging, makes it ideal for treating cancers, benign growths and functional disorders. A recent study in the International Journal of Cancer validated its clinical strength, highlighting efficacy in treating brain stem metastases.
In the fiscal second quarter, CyberKnife posted more than 50% year-over-year revenue growth, far exceeding market trends, fueled by rising global adoption, most notably in China and Japan. Regulatory approval of the CyberKnife S7 in China has further solidified its standing in the premium Type A segment, enhancing leadership in the radiosurgery space.
Solid Q3 Results: Accuray delivered strong third-quarter fiscal 2025 results, beating earnings and revenue estimates, driven by robust global demand and a rise in unit volume. Growth in both product and service revenues, supported by an expanded product portfolio, fueled performance. The current book-to-bill ratio, with 35% of orders from replacements and the remainder from capacity expansions, signals sustained demand. Profitability was further aided by operational improvements, strategic pricing and a continued focus on working capital efficiency.
Factors That May Offset the Gains for ARAY
Reduced Product Orders and Backlog Pressure: Accuray experienced a notable decline in gross product orders during the third quarter of fiscal 2025, with the metric falling to $71.2 million from $89.1 million in the previous-year quarter, representing a 20% decrease. This reduction contributed to a lower book-to-bill ratio of 1.2x compared with 1.8x a year earlier, signaling softer near-term demand relative to shipments.
The company’s order backlog also contracted by about 10%, from approximately $503 million to $452 million, reflecting the impact of evolving global dynamics, including tariff-related disruptions and market uncertainties.
ARAY’s Estimate Trend
Accuray has been witnessing a stable estimate revision trend for fiscal 2025. Over the past 30 days, the Zacks Consensus Estimate for earnings has remained stable at 1 cent per share for FY25.
The Zacks Consensus Estimate for fourth-quarter fiscal 2025 revenues is pegged at $124.5 million, indicating a 7.3% decline from the year-ago reported number.
Estimates for Phibro Animal Health’s fiscal 2025 earnings per share have remained constant at $2.04 in the past 30 days. Shares of the company have risen 75% in the past year compared with the industry’s 10.8% growth. Phibro Animal Health’s earnings yield of 7.5% compares comfortably with the industry’s 1%. PAHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 30.6%.
Estimates for Boston Scientific’s 2025 earnings per share have remained constant at $2.91 in the past 90 days. Shares of the company have risen 32.3% in the past year compared with the industry’s growth of 10.8%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.8%. In the last reported quarter, Boston Scientific delivered an earnings surprise of 11.9%.
Cencora’s shares have rallied 32.8% in the past year. Estimates for the company’s fiscal 2025 earnings per share have increased 0.4% to $15.81 in the past 30 days. COR’s earnings beat estimates in each of the trailing four quarters, the average surprise being 6%. In the last reported quarter, Cencora posted an earnings surprise of 8.3%.
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Here's Why You Should Hold Accuray Stock in Your Portfolio for Now
Key Takeaways
Accuray Incorporated (ARAY - Free Report) is well-poised for growth in the coming quarters, courtesy of continued robust demand for its products. The optimism, led by robust global performance in the third quarter of fiscal 2025 and potential in the Radiosurgery Market, is expected to contribute further. However, reimbursement uncertainties and challenges related to tariff impacts are concerning.
This Zacks Rank #3 (Hold) company has lost 31.3% in the year-to-date period compared with an 10.8% decline in the industry. The S&P 500 has witnessed 6.5% growth in the said time frame.
The renowned radiation oncology company has a market capitalization of $139.1 million. Accuray predicts 106.3% earnings growth for fiscal 2025 and anticipates maintaining its strong performance going forward. The company has a P/S ratio of 0.3X compared with the industry’s 2.5X.
Image Source: Zacks Investment Research
Reasons Favoring Accuray’s Growth
Solid Product Demand Driving Growth: Accuray’s third-quarter fiscal 2025 results show strong and steady demand for its advanced radiation therapy systems, with total net revenues rising 12% year over year to $113.2 million and product revenues climbing 16% to $57 million, driven by a 23% jump in unit sales. Solid demand across both developed and emerging markets, along with a broad product mix and a book-to-bill ratio of 1.2x, points to strong revenue potential.
With a $452 million backlog and no canceled orders, customer confidence remains solid, backed by a mix of new purchases and replacements for older systems. Management emphasized that product revenues are growing faster than the market, while the service segment, which makes up nearly half of total revenues, continues to support margins and drive sustainable growth.
Strength in CyberKnife System: Accuray’s CyberKnife System, a robotic radiosurgery platform with more than 20 years of clinical backing, is designed to treat tumors throughout the body, especially in the head, skull base and spine. The system’s high precision, enabled by Synchrony real-time tumor tracking and ClearRT imaging, makes it ideal for treating cancers, benign growths and functional disorders. A recent study in the International Journal of Cancer validated its clinical strength, highlighting efficacy in treating brain stem metastases.
In the fiscal second quarter, CyberKnife posted more than 50% year-over-year revenue growth, far exceeding market trends, fueled by rising global adoption, most notably in China and Japan. Regulatory approval of the CyberKnife S7 in China has further solidified its standing in the premium Type A segment, enhancing leadership in the radiosurgery space.
Solid Q3 Results: Accuray delivered strong third-quarter fiscal 2025 results, beating earnings and revenue estimates, driven by robust global demand and a rise in unit volume. Growth in both product and service revenues, supported by an expanded product portfolio, fueled performance. The current book-to-bill ratio, with 35% of orders from replacements and the remainder from capacity expansions, signals sustained demand. Profitability was further aided by operational improvements, strategic pricing and a continued focus on working capital efficiency.
Factors That May Offset the Gains for ARAY
Reduced Product Orders and Backlog Pressure: Accuray experienced a notable decline in gross product orders during the third quarter of fiscal 2025, with the metric falling to $71.2 million from $89.1 million in the previous-year quarter, representing a 20% decrease. This reduction contributed to a lower book-to-bill ratio of 1.2x compared with 1.8x a year earlier, signaling softer near-term demand relative to shipments.
The company’s order backlog also contracted by about 10%, from approximately $503 million to $452 million, reflecting the impact of evolving global dynamics, including tariff-related disruptions and market uncertainties.
ARAY’s Estimate Trend
Accuray has been witnessing a stable estimate revision trend for fiscal 2025. Over the past 30 days, the Zacks Consensus Estimate for earnings has remained stable at 1 cent per share for FY25.
The Zacks Consensus Estimate for fourth-quarter fiscal 2025 revenues is pegged at $124.5 million, indicating a 7.3% decline from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Phibro Animal Health (PAHC - Free Report) , Boston Scientific (BSX - Free Report) and Cencora (COR - Free Report) . While Phibro Animal Health sports a Zacks Rank #1 (Strong Buy) at present, Boston Scientific and Cencora carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for Phibro Animal Health’s fiscal 2025 earnings per share have remained constant at $2.04 in the past 30 days. Shares of the company have risen 75% in the past year compared with the industry’s 10.8% growth. Phibro Animal Health’s earnings yield of 7.5% compares comfortably with the industry’s 1%. PAHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 30.6%.
Estimates for Boston Scientific’s 2025 earnings per share have remained constant at $2.91 in the past 90 days. Shares of the company have risen 32.3% in the past year compared with the industry’s growth of 10.8%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.8%. In the last reported quarter, Boston Scientific delivered an earnings surprise of 11.9%.
Cencora’s shares have rallied 32.8% in the past year. Estimates for the company’s fiscal 2025 earnings per share have increased 0.4% to $15.81 in the past 30 days. COR’s earnings beat estimates in each of the trailing four quarters, the average surprise being 6%. In the last reported quarter, Cencora posted an earnings surprise of 8.3%.