Accuray Incorporated ARAY is well-poised for growth in the coming quarters, courtesy of continued robust demand for its products. The optimism, led by strong global performance in the second quarter of fiscal 2025 and potential in the Radiosurgery Market, is expected to contribute further. However, reimbursement uncertainties and challenges related to FX impacts are concerning.
This Zacks Rank #3 (Hold) company’s shares have lost 20.7% so far this year compared with a 13.2% decline in the industry. The S&P 500 has witnessed a 14.1% decrease in the said time frame.
The renowned radiation oncology company has a market capitalization of $161.4 million. Accuray predicts 106.3% growth for fiscal 2025 and expects to maintain its strong performance going forward. The company has a P/S ratio of 0.4X compared with the industry’s 2.5X.
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Reasons Favoring Accuray’s Growth
Strength in CyberKnife System: Accuray’s CyberKnife System is a robotic radiosurgery platform designed to treat tumors throughout the body with high precision. Its effectiveness is supported by a substantial body of published research, which backs its use for a wide range of conditions, including cancers, benign tumors and functional disorders. With over 20 years of clinical validation, the CyberKnife System stands out for its capabilities in treating complex areas, including the head, skull base and spine.
In the fiscal second quarter, CyberKnife’s strong performance led to revenue growth of over 50% year over year, significantly exceeding overall market growth. Management attributed this success to the system’s advanced features, such as Synchrony real-time tumor tracking and ClearRT high-resolution imaging, which have driven increased adoption, particularly in China and Japan.
Recent regulatory approvals in China for the CyberKnife S7 system have further expanded its footprint within the premium Type A segment, where demand for precision and advanced treatment options is growing. Additionally, the system was recently featured in the International Journal of Cancer as a highly effective and time-efficient option for treating brain stem metastases, further reinforcing its clinical credibility.
Rising Product Demand: Accuray reported strong product demand in the second quarter of fiscal 2025, with product revenues increasing 19% year over year. The growth was driven by robust performance across CyberKnife, TomoTherapy (Radixact) and the newly launched Helix systems. The Helix platform secured 12 new orders in emerging markets, including Pakistan, Northern Africa and the broader APAC region.
The China-specific Tomo C System also contributed to increased demand, supported by recent regulatory approvals and local facility shipments. A book-to-bill ratio of 1.3 reflects solid order momentum and positions Accuray for continued market share gains, particularly in China, Japan and APAC.
Robust Global Performance Buoys Optimism: Accuray delivered a strong global performance in the second quarter of fiscal 2025, achieving broad-based revenue growth across key regions despite persistent macroeconomic headwinds. Total revenues increased, with significant contributions from China, Japan and the broader APAC region.
China emerged as the top performer, posting over 50% year-over-year revenue growth and capturing 10 percentage points of market share — even as the overall market declined under regulatory and anti-corruption pressures. This success was driven by the rapid adoption of the Tomo C System in the Type B segment, as well as the company’s strategic partnership with China Isotope and Radiation Corporation.
Japan also saw impressive results, with revenue growing more than 40% year over year. In the Europe, India, Middle East, and Africa (“EIMEA”) region, orders rose 7%, supported by emerging markets, such as Pakistan and Northern Africa, where the newly introduced Helix platform played a key role in winning new business. While revenues in the Americas and EIMEA regions declined due to quarterly fluctuations, Accuray anticipates a strong rebound in the second half of the fiscal year.
Factors That May Offset the Gains for ARAY
FX Impact Remains Challenging: Per management, the weak Japanese yen posed a significant challenge to Accuray's financial performance in second-quarter fiscal 2025, particularly affecting its service revenue stream in one of the largest and most established markets. The weakening of the yen against the U.S. dollar negatively impacted the company's recurring service revenues, which comprise a significant portion of the company's income from Japan.
Although Accuray implemented pricing actions to offset the currency depreciation, management acknowledged that these measures were insufficient to fully mitigate the impact of the yen’s weakness. The currency fluctuation has made Accuray's service contracts more expensive for local customers, potentially affecting its ability to retain contracts and secure new service agreements.
Reimbursement Uncertainties: ARAY’s commercial success is closely tied to the reimbursement landscape, as customers largely depend on coverage from public and private third-party payors for procedures performed using the CyberKnife and TomoTherapy platforms. The company’s ability to drive product adoption and expand market acceptance will significantly depend on the availability and adequacy of reimbursement for these procedures.
Additionally, continued insurance coverage for patients treated with ARAY’s technologies plays a critical role in sustaining demand. Any changes in reimbursement policies or rates by third-party payors could have a substantial impact on purchasing decisions and overall market dynamics.
Accuray 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.
The Zacks Consensus Estimate for third-quarter fiscal 2025 revenues is pegged at $102.2 million, indicating a 1% improvement from the year-ago reported number. The consensus mark for earnings implies a 16.7% improvement.
Key Picks
Some better-ranked stocks from the broader medical space are Masimo MASI, Cencora, Inc. COR and Boston Scientific Corporation BSX.
Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 20% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.
MASI’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.41%.
Masimo’s shares have lost 12.7% compared with the industry’s 13.2% decline so far this year.
Cencora, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 12.1%. COR’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 4.9%.
Cencora’s shares have risen 23.9% against the industry’s 3.2% decline year to date.
Boston Scientific, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.3%.
Boston Scientific’s shares have gained 0.4% against the industry’s 1.8% decline so far this year.
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