Accuray Inc. plunges on weak Q2, lowers guidance
Shares of Accuray Inc. (Nasdaq: ARAY) have descended to a new 52-week low on news after the close on Wednesday that the maker of robotic radio surgery equipment reported fiscal second-quarter profit that disappointed Wall Street, while lowering its full-year guidance.
The Sunnyvale, Calif.-based company, which manufactures a robotic system used for the treatment of solid tumors, reported that net income for the three months ended Dec. 29 was $2.3 million, or $0.04 per share, below the $0.09 per share forecasted by five analysts surveyed by Thomson Financial. A year earlier Accuray suffered a loss of $0.45 per share.
Revenues for the second quarter soared 98% to $52 million from $26.3 million a year earlier.
“Accuray continues to experience record-setting growth, with our fourth consecutive quarter of increasing revenue and backlog,” said president and CEO Euan Thomson in a statement.
However, Accuray had to lower its forecast for the fiscal 2008 year to a range of between $210 million and $230 million, down from a previous estimate of revenue between $250 million and $270 million.
The company chief attributed the revision to the tightening of credit markets in the United States.
“While this was a positive quarter with respect to revenue and backlog growth, we believe that broader credit market issues are having a short-term impact on some of our U.S. customers’ purchase and installation timelines, as obtaining financing has become more difficult,” Thomson said.
“When I look over the horizon I see a lot of headwinds going into 2008,” said Junaid Husain, an analyst with financial services firm Soleil Securities Group, in a phone interview. “Accuray has talked to their customers and feels that a portion of their backlog might not convert to revenue.”
According to Husain, who today downgraded the stock to “hold” from “buy,” the company is facing stiff competition, particularly from Palo Alto, Calif.-based Varian Medical Systems, Inc. (NYSE: VAR).
“Varian is getting some traction,” Husain explained, saying that the company, which has joined hands with German medical technology maker BrainLAB AG, recently launched a new radiosurgical product that has been well received.
“Varian might just be able to trump [Accuray] with new technology,” said Husain.
At close, shares of Accuray (ARAY) had dropped $5.46, or 36%, to $9.52. The previous 52-week low of $12.50 was established on Sept. 4, 2007, while the 52-week high of $31.09 was reached on Feb. 9, 2007.
