The analysts might have been a bit too bullish on Accuray Incorporated (NASDAQ:ARAY), given that the company fell short of expectations when it released its quarterly results last week. Unfortunately, Accuray delivered a serious earnings miss. Revenues of US$101m were 11% below expectations, and statutory losses ballooned 380% to US$0.06 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Accuray after the latest results.
Taking into account the latest results, the most recent consensus for Accuray from four analysts is for revenues of US$456.4m in 2025. If met, it would imply a credible 6.0% increase on its revenue over the past 12 months. Earnings are expected to improve, with Accuray forecast to report a statutory profit of US$0.10 per share. In the lead-up to this report, the analysts had been modelling 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 pretty serious reduction to earnings per share numbers.
It'll come as no surprise then, to learn that the analysts have cut their price target 11% to US$7.75. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Accuray, with the most bullish analyst valuing it at US$13.00 and the most bearish at US$5.00 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. 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 biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Accuray. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Accuray's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts 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.