Accuray, Inc. (ARAY)

This met a high level screen to indicate a buy and strong outperform against its peers (other tickers in its industry). My 1st version of this spreadsheet devles deep into the company's balnace sheet and recent income statements, combined with other relevant price data for the company including insider/institutional holdings, short interest, debt levels, etc.
Testing capabilities of this 1st version of my automated, valuation spreadhseet matched with my personal criteria and see how it holds up.

Its the new cure for cancer.

Accuray makes products that will be vital to the word in the coming years.

I work with CyberKnife. It is a good technology, but I don't think it is a good investment. Several problems: (1) CyberKnife is actually not a surgical tool, it is a radiation oncology tool (the surgeons and radiation oncologists are actually battling the turf now); (2) The radiation oncology has a dominant toy maker called Varian that won't let this company eat their lunch; (3) Radiation oncology market is very saturated, not much room for them to grow (some niche area, but not much else); (4) Reimbursement for CyberKnife has been cut left and right, practitioners have been leaving this for other better-paying procedures; (5) Technology-wise, they don't have any significant improvement in the pipeline.

Maker of the Cyberknife non-invasive cancer killer.
No more chemo and invasive surgery?? sounds good to me.
$600 million backlog of orders, 25% contingent due to the poor economy. When the economy picks up it will take off.

ARAY is overhyped. The cyberknife is a fancy tool, but not very versatile and actually quite limited in many respects.

It provides NO image guidance of the tumor besides orthogonal imaging, which the robot arm must track off of. There is no ability to obtain 3-dimensional imaging like a cone beam CT.

Moreover, as capital budgets get slashed, institutions and practices are going to buy the ONE machine that can do everything a cyberknife does and more, the Varian Trilogy with RapidArc. It can do regular RT treatments or radiosurgery anywhere in the body.

order backlog down by more than the revenue increase. Substantial reimbursement cuts announced in US

Accuray Inc. (ARAY)

Here’s a stock I stumbled upon this past weekend while my Mom was visiting. A commercial appeared on TV advertising the “CyberKnife”, and my Mom mentioned how someone she knew had traveled to Colorado Springs to undergo cancer treatment with this medical device. I of course checked it out to see if it is part of a publicly traded company, and sure enough, Accuray (ARAY) is a pure-play on the CyberKnife.

I believe at this point the stock may present a nice risk to reward scenario, and be worth placing a small bet on its future. Since ARAY’s IPO the stock has come down in price by 80%, all while revenues have increased at a nice pace, and profitability has just started to occur.

For a quick explanation on this medical device, watch the radiosurgery presentation on their website: http://www.accuray.com/videos/redefining_radiosurgery.aspx?video=Accuray_Redefining_Radiosurgery

A couple months ago I read Peter Barton’s (1951-2002) Not Fade Away. I specifically remember this part: “I don’t claim to be an expert or a scientist, but having been around the whole wide world of cancer treatments, there’s one extremely confident prediction I will make: Before too much longer, our current modes of treating the disease will come to seem as barbaric and primitive as bloodletting. The future lies in more targeted therapies that won’t decimate the entire body in the name of attacking a few offensive cells.” As I read that I remember wondering what future treatments would look like. Well, perhaps it is something like the CyberKnife.

Since the company is just turning to profitability, I will not be placing any focus on their P/E or other valuation measures, but instead on the prospects for their future along with some of their current favorable situations.

ARAY sells their CyberKnife device for $4.2 million each. This is the bulk of their revenues, with the remaining coming from just over 25% from services provided on the machines, and a small percentage from shared revenue streams.

Currently there are just 164 CyberKnife systems worldwide. According to their investor fact sheet, there may be an opportunity for 7,136 units worldwide. Even if just a small fraction of this really occurs, ARAY will benefit tremendously.

Already the company has a backlog of $591 million for new orders, so with their current $334 million market cap, plus $157 million in cash and investments the company has (and no debt!) they are positioned well even if the economy takes longer than expected to rebound. And of course, you’d naturally think that this type of treatment for the end users would be recession proof. Speaking of sensitivity to the economy, one of the main points they tried to get across in their last conference call is that while replacement equipment in hospitals and medical clinics is experiencing a slow-down, the CyberKnife is not replacement equipment, and is indeed a driver of growth for new patients where CyberKnife units are installed. There were no cancellations for orders last quarter.

Apparently further clinical studies are being done that will result in more information on the CyberKnife units effectiveness that will be completed in 18 months to 2 years. In the case that if the results are beneficial to the patients, beyond conventional treatment methods, I would expect ARAY to get a nice boost in their stock price along with years of growth for the company. So again, while I still think this stock needs to be viewed as a gamble rather than a safe investment, I do believe the risk to reward scenario is favorable now that the company has finally been profitable three out of the last four quarters, and the extra cash they have on hand makes the stock even safer yet.

RK

Russell 2000 expected growth 26% or better

The CyberKnife system, designed to treat solid tumors anywhere in the body as an alternative to traditional surgery. Could be a similar play as Intuitive Surgical over the next few years.

bought

Robots dont start to shake when the coffee wears off during surgery!.....Could turn in to a HOMERUN!

It's a gamble....but think of the payoff!

125 machines @4 million [usd] each,on back order. Short but excellent history for cure rates. Out patient treatment. Eliminates possibility for staff infection.New software increases patient load by 46%.Estimated growth of 650% next year.Do the research,this is a good one

qua;ity company product

robots are cool.

They have the best technology for curing cancer patients and ZERO debt. HELLO

Cheap stock now should fly high in the coming years as CyberKnife becomres more readily used.

testing big cap, low debt, high cash flow