Loss-Making Accuray Incorporated (NASDAQ:ARAY) Expected To Breakeven In The Medium-Term
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 Americas, Europe, the Middle East, India, Africa, Japan, China, and rest of the Asia Pacific region. On 30 June 2023, the US$302m market-cap company posted a loss of US$9.3m 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?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Check out our latest analysis for Accuray
According to the 5 industry analysts covering Accuray, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$15m in 2025. Therefore, the company is expected to breakeven roughly 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 147%, which is rather optimistic! 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 forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we would like to bring into light with Accuray is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of Accuray to cover in one brief article, but the key fundamentals for the company can all be found in one place – Accuray's company page on Simply Wall St. We've also compiled a list of key aspects you should further research:
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.
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.
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.
