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Why ViewRay Stock Lost 22% in November

By Demitri Kalogeropoulos – Dec 7, 2018 at 1:13PM

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Investors weren't happy with the radiation therapy specialist's latest earnings results.

What happened

Radiation therapy specialist ViewRay (VRAY 1.01%) trailed the market by a wide margin last month, shedding 22% compared to a 1.8% uptick in the S&P 500, according to data provided by S&P Global Market Intelligence.

The drop sent shares into significantly negative territory for the year, even though they had been up by as much as 40% in late July.

A nurse looking at a radiation monitor.

Image source. Getty Images.

So what

ViewRay's third-quarter report wasn't well received by investors. The company's $17.7 million of sales trailed expectations and soaring operating expenses ensured that net loss ballooned to $33 million, or $0.39 per share, from $11 million, or $0.19 per share, a year earlier.

Now what

Most of the cost surge can be blamed on turnover in ViewRay's executive ranks. The company's soft sales growth is also due to a temporary issue, management said, with an installation delay simply pushing a chunk of revenue out into fiscal 2019.  

Still, ViewRay had to book increasing losses while lowering its short-term sales outlook. Even though it still has a good shot at building a premium position in the radiation oncology space, that's a combination of trends that investors are likely to punish for a growth stock like this.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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