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Why Accuray Is Soaring Today

By Brian Feroldi - Oct 31, 2018 at 2:18PM

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Shares jump after the company reports mixed fiscal 2019 first-quarter results.

What happened

After reporting encouraging fiscal 2019 first-quarter results, shares of Accuray (ARAY -3.60%), a medical device company that makes the CyberKnife Stereotactic Radiosurgery System, were up 35% as of 2:00 p.m. EDT on Wednesday.

So what

Here's a look at the key numbers from the quarter:

  • Revenue increased 5% to $95.8 million. That was a smidge higher than Wall Street was expecting.
  • Net loss was $9.2 million, or $0.11 per share. That was worse than the $0.09 loss that analysts had predicted.

Looking beyond the numbers, management stated that China's Ministry of Health announced Type A and B quotas and licenses and that it is planning on cutting annual operating costs by $15 million to get the company on a path to profitability.

Doctor putting his hand on an elderly patient.

Image source: Getty Images.

In response to these recent news items, the company now expects full-year revenue growth of 3% to 5% and full-year adjusted EBITDA between $23 million and $29 million.

When combined with Accuray's beaten-down share price -- shares had fallen nearly 30% over the last year prior to today's jump -- it is understandable that Accuray's long-suffering bulls are finally having a good day.

Now what

I think that Accuray makes an interesting product that serves a real need, but I have a hard time getting excited about a company that has been a dreadful long-term investment, only promises 5% year-over-year revenue growth, and has to lean on cost-cutting moves to get to profitability. For that reason, my plan is to keep my capital far away from Accuray's stock.

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Stocks Mentioned

Accuray Incorporated Stock Quote
Accuray Incorporated
ARAY
$2.14 (-3.60%) $0.08

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