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Ahead of the Bell: Accuray still rates as a 'buy'

The Associated Press

Despite Accuray Inc.'s weakening sales and plans for big job cuts, some analysts still like the radiation oncology equipment seller's potential.

The Sunnyvale, Calif., company's stock plunged 28 percent in premarket trading Friday after it said late Thursday that it anticipates fiscal second-quarter revenue of $72 million to $75 million.

That is down sharply from the $106.4 million in revenue it brought in during the same October-December quarter in 2011. The revenue for quarter also falls short of the $93.8 million that analysts polled by FactSet had expected.

The company blames problems with changes to its sales force, manufacturing and supply chain.

For the 2013 fiscal year, which runs through June, Accuray expects to post a loss of 87 to 95 cents per share, excluding one-time items, on revenue of $320 million to $330 million.

Analysts had forecast the company would post an adjusted loss of 55 cents per share on revenue of $406 million for the year.

The company also plans to cut its work force — 1,100 as of June — by 13 percent.

Jefferies analyst Raj Denhoy lowered his price target on the stock to $6.50 from $10 but kept a "buy" rating. The analyst said in a research note Friday that a "reset" under new CEO Joshua Levine was expected, but the severity was a surprise.

Even so, Denhoy said he still thinks the company's technologies are still valuable, supporting its stock in the long term.

Brean Capital analyst Jason Wittes said in a separate note the results were disappointing, even though he expected the company's new CEO to set lower expectations. He said the impact from Accuray's new products would be just modest, but was more optimistic that company would change its sales force for the better by late summer. He also kept a "buy" rating on the company.

Company shares slid $4.90, or 28 percent, to $4.90 Friday before the market opened. The stock had gained 54 percent over the past 52 weeks.