Accuray Making Progress, But Not Enough To Swing Sentiment

When I last wrote about Accuray (NASDAQ:ARAY) in early February, I said that the challenges the company was facing over the next 12 months from supply-chain issues and ongoing COVID-19 disruptions in China would likely mask any progress at the company. So it has been, as the shares have declined about 25% or so (worse before a recent rally in the shares) and the Street remains largely disinterested in this name.

There is ample cause for skepticism on Accuray; despite several important product/technology advances and progress in the under-penetrated Chinese market, there has been almost no revenue growth over the past decade ($430M versus $409M) and profitability is still inadequate.

On the other hand, those technological and product improvements aren’t trivial, and the radiation oncology market is changing more than some investors may appreciate. The Chinese market should improve as lockdowns ease, and changes to both Accuray’s product line-up and the rad-onc market should drive above-market performance.

All of that said, I completely understand investor skepticism on this name. Although the shares look undervalued (even on low expectations), I will not quibble with investors who want nothing to do with this name, and it’s one that I’d only recommend for more risk-tolerant investors willing to accept the risk that nothing ever really changes here.

 

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Accuray Making Progress, But Not Enough To Swing Sentiment