What do you do with a company that isn't growing anywhere near fast
enough to be a growth stock, doesn't have the margins or cash flow to be
a value stock, but has enough innovation and market potential to still
be a disruptive factor in the industry? Unfortunately for Accuray's (NASDAQ:ARAY)
shareholders, while the company has definitely been making progress,
the pace of that progress keeps it stuck in an underwhelming valuation
range, and there are still considerable doubts about whether it can take
the sizable step forward it needs to be a long-term viable third player
in its market.
I continue to approach
Accuray with what I consider to be optimistic skepticism. I think the
company has good technology and has really been focusing on addressing
the past and current deficiencies of its systems. That said, this is a
slow-growing market with a huge entrenched competitor and it is far from
clear whether Accuray can establish a big enough market share footprint
to drive the margins it needs to create long-term shareholder value. I
think a fair value around $7.50 to $8.50 is fair today, with underlying
upside if the company can demonstrate its ability to get and hold a
double-digit market share before 2020.
Continue here:
Accuray Still Stuck In Med-Tech's Twilight Zone
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