On Thursday, Lake Street Capital Markets adjusted its price target for Accuray (NASDAQ:ARAY) Incorporated (NASDAQ:ARAY), a company specializing in radiotherapy equipment, reducing it to $6.00 from the previous $13.00. Despite the significant cut, the firm maintains a Buy rating on the stock.
Accuray faced challenges in the third quarter as U.S. hospitals decreased their capital spending on radiotherapy equipment, and delays occurred in the approval process for the Tomo C precision treatment planning system in China. These setbacks have affected Accuray's margins and have had a notable impact on both the third-quarter results and the projections for the fiscal year ending in June.
The U.S. and China are critical markets for Accuray, with the U.S. being one of its largest and most profitable regions, and China representing a substantial growth opportunity. The difficulties in these markets have prompted Lake Street Capital Markets to revise their forecasts for the current fiscal year and to set new expectations for fiscal year 2025.
The new price target of $6 is primarily attributed to a lower multiple assignment on the firm's fiscal year 2025 revenue estimate, which is projected to be $450.2 million, marking a 4% year-over-year increase. Lake Street Capital Markets suggests that while the current price could offer potential upside, the near-term obstacles have slowed growth more than initially expected.
InvestingPro Insights
Accuray Incorporated (NASDAQ:ARAY) is navigating a challenging period, as reflected in the recent adjustments by Lake Street Capital Markets. To provide a more comprehensive picture, InvestingPro data reveals that Accuray has a market capitalization of $215.2 million and is trading at a negative P/E ratio of -9.83, indicating that the market may have reservations about its near-term earnings potential. The company's revenue for the last twelve months as of Q3 2024 stands at $430.55 million, with a slight decline of 2.0% in revenue growth, which aligns with the concerns raised about its performance in critical markets.
Additionally, Accuray is trading near its 52-week low, which could signal a potential buying opportunity for investors who believe in the company's long-term strategy, despite the lack of profitability over the last twelve months and the absence of dividend payouts. With the stock's price at $2.13 per share, investors might weigh the potential for recovery against the recent negative price total return of -23.32% year-to-date.
For those considering an investment in Accuray, there are more InvestingPro Tips available that delve deeper into the company's financial health and market position. Utilize the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and unlock the full suite of data and analytics that InvestingPro offers. Remember, there are 3 additional InvestingPro Tips that could provide valuable insights into Accuray's future prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.