Analysts Have Lowered Expectations For Accuray Incorporated (NASDAQ:ARAY) After Its Latest Results

It's shaping up to be a tough period for Accuray Incorporated (NASDAQ:ARAY), which a week ago released some disappointing third-quarter results that could have a notable impact on how the market views the stock. It definitely looks like a negative result overall with revenues falling 11% short of analyst estimates at US$101m. Statutory losses were US$0.06 per share, 380% bigger than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Accuray

After the latest results, the four analysts covering Accuray are now predicting revenues of US$456.4m in 2025. If met, this would reflect a satisfactory 6.0% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Accuray forecast to report a statutory profit of US$0.10 per share. Before this earnings report, the analysts had been forecasting revenues of US$489.5m and earnings per share (EPS) of US$0.13 in 2025. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a large cut to earnings per share numbers.

The consensus price target fell 11% to US$7.75, with the weaker earnings outlook clearly leading valuation estimates. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Accuray at US$13.00 per share, while the most bearish prices it at US$5.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Accuray's growth to accelerate, with the forecast 4.8% annualised growth to the end of 2025 ranking favourably alongside historical growth of 2.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 8.1% per year. So it's clear that despite the acceleration in growth, Accuray is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Accuray going out to 2026, and you can see them free on our platform here..

It is also worth noting that we have found 2 warning signs for Accuray that you need to take into consideration.

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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.