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Accuray's Medical Systems to be Acquired by Dubai Hospital

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Headquartered in Sunnyvale, CA, Accuray Inc. (ARAY - Free Report) recently announced that it has signed an agreement with the Neuro Spinal Hospital (NSH) in Dubai, United Arab Emirates. Per the agreement, Neuro Spinal Hospital will acquire the company’s proprietary medical systems consisting of one CyberKnife M6 System and one Radixact System. The deal falls under Accuray's fiscal fourth-quarter (ended on Jun 30, 2017) backlog.

Stock Price & Estimate Revision Trend

Accuray has had an unimpressive run on the bourse on a year-to-date basis. The company has gained roughly 2.17%, lower than the Zacks categorized Medical instruments sub-industry’s rally of almost 17.39%. Moreover, the current level compares unfavorably with the S&P 500’s 8.46% gain.

Furthermore, the estimate revision for the stock has been unfavorable. The company has witnessed one estimate moving south over the last two months, for the year compared with no movement in the opposite direction. As a result, full-year estimates deteriorated 7 cents to a loss of 28 cents over the same time frame.

Driven by bearish analyst sentiments, Accuray carries a Zacks Rank #5 (Strong Sell), which signifies underperformance in the near term.

Coming back to the news, the CyberKnife M6 System will be primarily used by the Neuro Spinal hospital to treat neurological indications such as arteriovenous malformations and trigeminal neuralgia. It would also be utilized for extracranial cases such as prostate, lung and spine. The Radixact System will be used to treat breast, head and neck, spine and total marrow irradiation.

Bottom line

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

However, TomoTherapy and CyberKnife systems involve significant capital spending. Many healthcare providers are reluctant to invest in these systems due to sluggish macro-economic conditions. Both the systems have long sales and implementation cycles, escalating the concerns for Accuray.

Key Picks

A few top-ranked stocks in the broader medical sector are Edwards Lifesciences Corporation (EW - Free Report) , CryoLife, Inc. (CRY - Free Report) and Edap Tms S.a. (EDAP - Free Report) . Notably, Edwards Lifesciences and Edap sport a Zacks Rank #1 (Strong Buy), while CryoLife has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. Notably, the stock represents an impressive one-year return of 88.3%.

CryoLife yielded a strong return of 3.2% over the last one month. The stock delivered a positive earnings surprise of 80% in the last reported quarter.

Edap Tms represents an impressive one-year return of 28.9% for the last three months. The company delivered a solid earnings surprise of 533.3% in the last reported quarter.

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