On Tuesday, Roth/MKM initiated coverage on Accuray (NASDAQ:ARAY) Incorporated (NASDAQ: ARAY), assigning the stock a Buy rating with a price target set at $9.00. The firm highlighted Accuray's current 10% market share in the radiation oncology sector and its consistent cash generation as positive indicators for the company's financial health.
Accuray's strategic move to enter the value-priced segment with the introduction of Tomo C in China and Helix in India is expected to strengthen its position in the emerging markets. The first installations of Tomo C are scheduled for June in the fourth fiscal quarter of 2024, with Helix following in the fiscal year 2025.
The firm anticipates that Accuray's expansion into these new markets will accelerate the company's revenue growth from its current low to mid-single digits to at least mid to high-single digits. The analyst from Roth/MKM believes that this growth trajectory, combined with the company's ability to compete more effectively in these rapidly developing regions, should attract investor interest and justify a higher valuation for the stock.
The positive outlook on Accuray's market share increase and revenue growth potential in China and India reflects the company's strategic efforts to tap into faster-growing markets. The firm's assessment suggests that these initiatives could significantly impact Accuray's financial performance in the coming years.
InvestingPro Insights
As Accuray Incorporated (NASDAQ: ARAY) garners attention with its strategic moves in emerging markets, real-time data from InvestingPro offers additional insights into the company's financial metrics and market valuation. With a market capitalization of $278.66 million, Accuray's presence in the radiation oncology sector is notable, particularly as it ventures into the value-priced segment with new products like Tomo C and Helix.
The company's push into new markets coincides with a significant return over the last week, as indicated by an 8.91% one-week price total return. This uptick in investor interest may reflect optimism surrounding the company's expansion plans. Additionally, Accuray's revenue growth over the last twelve months stands at 7.2%, underscoring the firm's potential to accelerate its financial growth in line with its market share expansion.
However, investors should be aware of some challenges. According to InvestingPro Tips, analysts have recently revised their earnings expectations downwards for the upcoming period, and they do not anticipate the company will be profitable this year. Accuray's current Price / Book ratio, last recorded at 5.85, suggests that the stock is trading at a high valuation multiple relative to its book value. Notably, the company has not been profitable over the last twelve months, with an adjusted P/E ratio of -19.16.
For those looking to delve deeper into Accuray's financials and market performance, InvestingPro offers additional tips to guide investment decisions. Interested readers can find further analysis and metrics at InvestingPro's dedicated page for Accuray: https://www.investing.com/pro/ARAY. Moreover, for a more comprehensive experience, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to a wealth of investment insights. With 6 more InvestingPro Tips available, investors can gain a nuanced understanding of Accuray's market position and future prospects.
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