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 third quarter of fiscal 2025 and potential in the Radiosurgery Market, is expected to contribute further. However, reimbursement uncertainties and challenges related to tariff impacts are concerning.This Zacks Rank #3 (Hold) company has lost 31.3% in the year-to-date period compared with an 10.8% decline in the industry. The S&P 500 has witnessed 6.5% growth in the said time frame.The renowned radiation oncology company has a market capitalization of $139.1 million. Accuray predicts 106.3% earnings growth for fiscal 2025 and anticipates maintaining its strong performance going forward. The company has a P/S ratio of 0.3X compared with the industry’s 2.5X.Image Source: Zacks Investment ResearchReasons Favoring Accuray’s GrowthSolid Product Demand Driving Growth:  Accuray’s third-quarter fiscal 2025 results show strong and steady demand for its advanced radiation therapy systems, with total net revenues rising 12% year over year to $113.2 million and product revenues climbing 16% to $57 million, driven by a 23% jump in unit sales. Solid demand across both developed and emerging markets, along with a broad product mix and a book-to-bill ratio of 1.2x, points to strong revenue potential.With a $452 million backlog and no canceled orders, customer confidence remains solid, backed by a mix of new purchases and replacements for older systems. Management emphasized that product revenues are growing faster than the market, while the service segment, which makes up nearly half of total revenues, continues to support margins and drive sustainable growth.Strength in CyberKnife System: Accuray’s CyberKnife System, a robotic radiosurgery platform with more than 20 years of clinical backing, is designed to treat tumors throughout the body, especially in the head, skull base and spine. The system’s high precision, enabled by Synchrony real-time tumor tracking and ClearRT imaging, makes it ideal for treating cancers, benign growths and functional disorders. A recent study in the International Journal of Cancer validated its clinical strength, highlighting efficacy in treating brain stem metastases.In the fiscal second quarter, CyberKnife posted more than 50% year-over-year revenue growth, far exceeding market trends, fueled by rising global adoption, most notably in China and Japan. Regulatory approval of the CyberKnife S7 in China has further solidified its standing in the premium Type A segment, enhancing leadership in the radiosurgery space.Solid Q3 Results: Accuray delivered strong third-quarter fiscal 2025 results, beating earnings and revenue estimates, driven by robust global demand and a rise in unit volume. Growth in both product and service revenues, supported by an expanded product portfolio, fueled performance. The current book-to-bill ratio, with 35% of orders from replacements and the remainder from capacity expansions, signals sustained demand. Profitability was further aided by operational improvements, strategic pricing and a continued focus on working capital efficiency.Factors That May Offset the Gains for ARAYReduced Product Orders and Backlog Pressure: Accuray experienced a notable decline in gross product orders during the third quarter of fiscal 2025, with the metric falling to $71.2 million from $89.1 million in the previous-year quarter, representing a 20% decrease. This reduction contributed to a lower book-to-bill ratio of 1.2x compared with 1.8x a year earlier, signaling softer near-term demand relative to shipments.The company’s order backlog also contracted by about 10%, from approximately $503 million to $452 million, reflecting the impact of evolving global dynamics, including tariff-related disruptions and market uncertainties.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 for FY25.The Zacks Consensus Estimate for fourth-quarter fiscal 2025 revenues is pegged at $124.5 million, indicating a 7.3% decline from the year-ago reported number.Key PicksSome better-ranked stocks in the broader medical space are Phibro Animal Health PAHC, Boston Scientific BSX and Cencora COR. While Phibro Animal Health sports a Zacks Rank #1 (Strong Buy) at present, Boston Scientific and Cencora carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.Estimates for Phibro Animal Health’s fiscal 2025 earnings per share have remained constant at $2.04 in the past 30 days. Shares of the company have risen 75% in the past year compared with the industry’s 10.8% growth. Phibro Animal Health’s earnings yield of 7.5% compares comfortably with the industry’s 1%. PAHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 30.6%.Estimates for Boston Scientific’s 2025 earnings per share have remained constant at $2.91 in the past 90 days. Shares of the company have risen 32.3% in the past year compared with the industry’s growth of 10.8%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.8%. In the last reported quarter, Boston Scientific delivered an earnings surprise of 11.9%.Cencora’s shares have rallied 32.8% in the past year. Estimates for the company’s fiscal 2025 earnings per share have increased 0.4% to $15.81 in the past 30 days. COR’s earnings beat estimates in each of the trailing four quarters, the average surprise being 6%. In the last reported quarter, Cencora posted an earnings surprise of 8.3%.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They includeStock #1: A Disruptive Force with Notable Growth and ResilienceStock #2: Bullish Signs Signaling to Buy the DipStock #3: One of the Most Compelling Investments in the MarketStock #4: Leader In a Red-Hot Industry Poised for GrowthStock #5: Modern Omni-Channel Platform Coiled to SpringMost of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%.Download Atomic Opportunity: Nuclear Energy's Comeback free today.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 Boston Scientific Corporation (BSX): Free Stock Analysis Report Accuray Incorporated (ARAY): Free Stock Analysis Report Cencora, Inc. (COR): Free Stock Analysis Report Phibro Animal Health Corporation (PAHC): 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