COVID-19 Saps Some Of Accuray's Momentum, But Execution Remains Strong

I feel bad for Accuray (ARAY) management. This team has done a lot of work to improve the company over the years and brought the company to the cusp of a potentially transformative opportunity... only to see COVID-19 slam the brakes on that progress. While delays in converting orders from China into actual placements and revenue are frustrating, I don't view this as an execution issue, nor do I view this business as lost, just delayed.

How bad things will get over the next quarter or two, and possibly even the next year or two, is a big unknown. While hospitals are continuing to provide radiotherapy to patients, the COVID-19 crisis has brought new procurements and installations to a dead stop and has scrambled the budgets for many centers. The arguments for radiotherapy, and for Accuray's systems, remain unchanged, though, and I think the worst that will happen is that business, revenue, and profits get "pushed to the right" and delayed. That does reduce the near-term fair value of the shares, but the 40% drop since my last article far exceeds my estimate of that impact.

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COVID-19 Saps Some Of Accuray's Momentum, But Execution Remains Strong