Accuray Shares Fall on Analyst Concerns
Monday June 11, 1:03 pm ET
Accuray Shares Tumble After Analyst's Downbeat Outlook Warns Key Product Lacks Versatility
what looks like great technology to someone that doesn't actually perform the procedures may not actually be that innovative. Maybe you should investigate the competitor devices this analyst spoke about. You may surprised there are better products and you overpaid for the stock, or you may think it is much better and become even more convinced it is the best, but do your homework. I don't think you have looked at the competition. Just friendly advice. Please see comments below the analyst's
NEW YORK (AP) -- Shares of medical product developer Accuray Inc. fell Monday after an analyst issued a downbeat outlook and said the company's key cancer-surgery tool lacked versatility.
Shares of the Sunnyvale, Calif.-based company fell $1.07, or 4.5 percent, to $22.62 at midday. Since going public in February, the stock has traded from $19.66 to $31.09.
CIBC World Markets analyst Amit Hazan initiated coverage of Accuray Monday with a rating of "Sector Underperfomer" and a price target of $19.
In a note to investors, Hazan wrote that the company is likely to play a smaller role in the $6 billion stereotactic radiosurgery market than expected. That is because the company's main product, the CyberKnife robotic radiology system, is equally or less versatile than competitors' cheaper tumor-targeting systems.
"Although CyberKnife should be competitive in niche markets (mainly to neurosurgeons), in our opinion, the company's order growth prospects are insufficient to justify the current valuation," he wrote.
Accuray's CyberKnife uses a robotic system to deliver targeted beams of radiation to treat cancerous tumors anywhere in the body.
Hazan also noted concern about the company's growth prospects.
"Too much attention has been paid to backlog, while 'new orders' and order growth have not been scrutinized," he wrote. "We have done that, and see lumpy unit orders for the past five quarters that do not visibly portray growth. We only model 13 percent order growth in fiscal 2008 and 9 percent for fiscal 2009."
From their last earning report I find it hard to believe the backlog numbers. If the backlog is up 9 percent from the prior quarter the backlog last quarter was about 500 million but they only produced revenue of 37 million. Backlog up 60 percent over last year which meant it must have been about 250 million last year. With backlogs like that they should be doing more in revenue
Record revenue of $37.3 million, up 129 percent from the fiscal third quarter 2006 and up 42 percent from the fiscal second quarter 2007
-- Total backlog increased to $559 million, up 60 percent from the fiscal third quarter 2006 and up 9 percent from the fiscal second quarter 2007
