Accuray Incorporated (NASDAQ:ARAY): When Will It Breakeven?

With the business potentially at an important milestone, we thought we'd take a closer look at Accuray Incorporated's (NASDAQ:ARAY) future prospects. Accuray Incorporated designs, develops, manufactures, and sells radiosurgery and radiation therapy systems for the treatment of tumors in the United States, Canada, Latin America, Australia, New Zealand, Europe, the Middle East, India, Africa, Japan, China, and rest of the Asia Pacific region. On 30 June 2024, the US$191m market-cap company posted a loss of US$16m for its most recent financial year. Many investors are wondering about the rate at which Accuray will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Accuray

Accuray is bordering on breakeven, according to the 4 American Medical Equipment analysts. They expect the company to post a final loss in 2025, before turning a profit of US$12m in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 137% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Accuray's growth isn’t the focus of this broad overview, but, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Accuray currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Accuray which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Accuray, take a look at Accuray's company page on Simply Wall St. We've also put together a list of key aspects you should further examine:

1. Historical Track Record: What has Accuray's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Accuray's board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.