Friday, September 4, 2015

Seeking Alpha: The Next 12 Quarters Should Say A Lot About Accuray

I don't typically like to talk about companies in "make or break" terms, but the next four quarters may be Accuray's (NASDAQ:ARAY) last, best hope for establishing itself as a legitimate growth story in radiation oncology. The company now has a fully-fledged product line-up and the marketing resources to get its name in front of radonc centers. Factoring in a (relatively) new trade-in program and the prospect for significant system renewals, the company really needs to hit its mark with quarterly orders to make a compelling case that it is a viable third player against Varian (NYSE:VAR) and Elekta (OTCPK:EKTAY).

Moving the model out a year boosts my DCF-based fair value estimate a bit above $9 while my revenue-based fair value stays around $12. That's meaningful undervaluation, but this is a company with an uninspiring record when it comes to disrupting the market and generating consistent order growth. I do believe that Accuray now offers reliable, capable, and differentiated systems that are appropriate for both multi-vault academic centers and smaller single/dual-vault community hospitals, but the next twelve months are a key proving ground for the company's sales effort and marketing message.

Read more here:
The Next 12 Quarters Should Say A Lot About Accuray

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