Accuray Inc Receives a Hold from BTIG

By Jason Carr

BTIG analyst Sean Lavin reiterated a Hold rating on Accuray Inc (NASDAQ: ARAY) on April 28. The company’s shares closed last Friday at $4.55.

Lavin observed:

“Concerning; Guidance Lowered as Predicted; Neutral Accuray showed strong order growth in the quarter driven by a mix of Cyberknife, Radixact and a modest contribution from On-Rad across multiple geographies. While gross orders were strong, the revenue was significantly below expectations and, just as we predicted, revenue guidance for FY17 was lowered $30M to $380M to $390M from $410M to $420M previously (we modeled $395M heading into the print). ARAY is seeing a large proportion of orders OUS and into distributors with limited lines of sight on when those orders begin to convert to revenue which makes it challenging, not only to guide from mgmt.’s viewpoint, but also tough to model from our perspective. The company undertook a restructuring in the Q to improve these processes but we feel this will take multiple quarters to improve. Many companies within MedTech rely on OUS distributors but have limited predictability on sales OUS and we do not believe ARAY is immune to those challenges. All told, we maintain our Neutral rating and need to see revenue conversion consistently.   Soft GMs limit improvements in adjusted EBITDA growth. Mgmt has undertaken steps to improve COGS but volume swings in units continue to impact gross margins Q-to-Q. GMs came in 400bps below our expectations and will come in at ~37% for FY17. We expect GMs to remain in the low 40s in FY18 and beyond. Adj. EBTIDA guidance for FY17 was also lowered to $22M to $26M from $32M to $38M driven by the lowered revenue and soft GMs.”

According to TipRanks.com, Lavin is a 5-star analyst with an average return of 12.1% and a 59.8% success rate. Lavin covers the Healthcare sector, focusing on stocks such as Tactile Systems Technology, Trivascular Technologies, and Obalon Therapeutics Inc.

Accuray Inc has an analyst consensus of Moderate Buy, with a price target consensus of $6.67.

The company has a one year high of $6.39 and a one year low of $4.06. Currently, Accuray Inc has an average volume of 869.2K.

Based on the recent corporate insider activity of 28 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of ARAY in relation to earlier this year. Most recently, in November 2015, Joshua Levine, the President & CEO of ARAY bought 50,000 shares for a total of $356,000.

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Accuray, Inc. is the premier radiation oncology company which develops, manufactures and sells personalized treatment solutions such as the cyberKnife and tomotherapy systems, which are designed to deliver radiosurgery, stereotactic body radiation therapy, intensity modulated radiation therapy, image-guided radiation therapy and adaptive radiation therapy. The cyberKnife system is designed to combine continual image guidance technology with a compact linear accelerator, or linac, which has the ability to move in three dimensions according to the treatment plan. The tomotherapy system operates on a ring gantry and combines integrated computed tomography, or CT, imaging with intensity modulated radiation therapy, which is designed to deliver radiation treatments with speed and precision while reducing radiation exposure to surrounding healthy tissue. Accuray was founded by John R. Adler in 1990 and is headquartered in Sunnyvale, CA.