Monday, November 19, 2018

A Renewed Spark At Accuray, But Follow Through Is Critical

One of the perennial challenges in investing is maintaining a healthy balance of skepticism and realism while still allowing for the possibility of upside (and avoiding poisonous cynicism), and that can be particularly challenging when you’re dealing with companies with spotty track records. Accuray (ARAY) has had moments in the past when it looked like the story was finally coming together and the company was poised to generate meaningful forward progress, but those moments were all too brief and the company has struggled to post any real growth since the merger of TomoTherapy and Accuray in 2011.

Accuray’s fiscal first quarter got things off to a good start and there are credible reasons to believe that this fiscal year could be the start of a long-awaited meaningful improvement in the company’s financials. Even modest growth expectations would support a price above $5.50 and a fair value into the high single-digits is not unreasonable, but successful execution and delivery has long proven elusive for this company and I’m not confident enough to go all-in recommending Accuray shares on a “it’s different this time … really!” thesis.

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A Renewed Spark At Accuray, But Follow Through Is Critical

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