Here's Why You Should Hold Accuray Stock in Your Portfolio for Now

Accuray Incorporated ARAY is well-poised for growth in the coming quarters, courtesy of continued robust demand for its products. The optimism, led by robust global performance in the second quarter of fiscal 2025 and potential in the Radiosurgery Market, is expected to contribute further. However, reimbursement uncertainties and challenges related to FX impacts are concerning.This Zacks Rank #3 (Hold) company has lost 26.3% in the past year compared with a 1.3% decline in the industry. The S&P 500 has witnessed 16.2% growth in the said time frame.The renowned radiation oncology company has a market capitalization of $197.4 million. Accuray predicts 106.3% growth for fiscal 2025 and expects to maintain its strong performance going forward. The company has a P/S ratio of 0.4X compared with the industry’s 2.7X.Image Source: Zacks Investment ResearchReasons Favoring Accuray’s GrowthStrength in CyberKnife System: Accuray’s CyberKnife System is a robotic radiosurgery system, capable of treating tumors throughout the body. An extensive body of published literature supports its use in the treatment of various targets, including cancers, benign tumors and functional diseases. With more than two decades of clinical evidence, the CyberKnife System offers distinct advantages in the treatment of diseases in the head, base of the skull and spine.During the fiscal second quarter, management commented on the excellent performance of the CyberKnife system, with revenues growing more than 50% year over year, significantly outpacing market growth. Per management, the system's advanced capabilities, including Synchrony real-time tumor tracking technology and ClearRT high-quality imaging, have driven higher adoption rates, especially in China and Japan.Recent regulatory approvals in China for the CyberKnife S7 system have further expanded its market reach in the Type A premium segment, where precision and advanced treatment options are in high demand. The CyberKnife system was also highlighted in the International Journal of Cancer as an effective and time-efficient treatment for brain stem metastases, strengthening its clinical reputation.Rising Product Demand:  Accuray's second-quarter fiscal 2025 saw strong product demand, with product revenues rising 19% year over year, driven by CyberKnife, TomoTherapy (Radixact) and the new Helix systems. The Helix platform secured 12 orders across emerging markets like Pakistan, Northern Africa and APAC. The China-specific Tomo C System also boosted demand, aided by regulatory approvals and local facility shipments. A 1.3 book-to-bill ratio highlights sustained order momentum, positioning Accuray for continued market share growth, especially in China, Japan and APAC.Robust Global Performance Buoys Optimism: Accuray delivered a strong global performance in the second quarter of fiscal 2025, driven by broad-based revenue growth across key regions despite ongoing macroeconomic challenges. The company's total revenue grew with significant contributions from China, Japan and APAC regions. China was the standout performer, delivering more than 50% year-over-year revenue growth and gaining 10 points of market share, despite the overall market decline due to regulatory pressures and anti-corruption campaigns. This growth was fueled by the Tomo C System's rapid adoption in the Type B market and the company's strategic partnership with China Isotope and Radiation Corporation.Japan also reported more than 40% year-over-year growth. The Europe, India, Middle East, and Africa (EIMEA) region saw 7% order growth, driven by emerging markets like Pakistan and Northern Africa, with the newly launched Helix platform playing a critical role in capturing new orders. Although revenues were down in the Americas and EIMEA regions due to quarterly variability, the company expects a strong second-half rebound in these markets.Factors That May Offset the Gains for ARAYFX Impact Remains Challenging: Per management, the weak Japanese yen posed a significant challenge to Accuray's financial performance in second-quarter fiscal 2025, particularly affecting its service revenue stream in one of the largest and most established markets. The weakening of the yen against the U.S. dollar negatively impacted the company's recurring service revenues, which make up a large portion of the company's income from Japan.Although Accuray implemented pricing actions to offset the currency depreciation, management acknowledged that these measures were insufficient to fully mitigate the impact of the yen’s weakness. The currency fluctuation has made Accuray's service contracts more expensive for local customers, potentially affecting its ability to retain contracts and secure new service agreements.Reimbursement Uncertainties: ARAY’s customers rely significantly on reimbursement from public and private third-party payors for the CyberKnife and TomoTherapy platform procedures. The company’s ability to commercialize its products successfully and increase market acceptance of the same will significantly depend on the extent to which public and private third-party payors provide adequate coverage and reimbursement for procedures. These procedures are performed using its products.This also depends on the extent to which patients treated using its products continue to be covered by health insurance. Third-party payors may establish or change the reimbursement for medical products and services that could significantly influence the purchase.ARAY’s Estimate TrendAccuray has been witnessing a stable estimate revision trend for fiscal 2025. Over the past 30 days, the Zacks Consensus Estimate for earnings has remained stable at 1 cent per share.The Zacks Consensus Estimate for third-quarter fiscal 2025 revenues is pegged at $102.2 million, indicating a 1% improvement from the year-ago reported number.Key PicksSome better-ranked stocks from the industry have been discussed below.Masimo MASI, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 6.1% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 14.41%. Its shares have risen 63.5% against the industry’s 1.9% decline in the past six months.Alphatec ATEC, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 40% for 2025. Its earnings missed estimates in each of the trailing four quarters, delivering an average negative surprise of 12.60%.ATEC’s shares have gained 77% against the industry’s 1.9% decline in the past six months.Avenna Healthcare AVAH, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 666.7% for 2025.AVAH delivered a trailing four-quarter average earnings surprise of 135%. The company is expected to release fourth-quarter results in March. Its shares have lost 21.8% in the past six months compared with the industry’s 2.9% decline.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Accuray Incorporated (ARAY): Free Stock Analysis Report Masimo Corporation (MASI): Free Stock Analysis Report Alphatec Holdings, Inc. (ATEC): Free Stock Analysis Report Aveanna Healthcare Holdings Inc. (AVAH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks