Accuray (ARAY) Stock Forecast & Price Target

Accuray Inc. is demonstrating positive momentum in its financial performance, particularly with Service revenue growing by 4% year-over-year, supported by a strong 10% growth in contract revenue. The company's focus on improving service gross margins through higher pricing and enhanced product reliability is expected to bolster profitability, contributing to an overall improved revenue growth profile. Furthermore, management's insights into customer timelines and anticipated improvements in system installs and revenue recognition for the second half of FY26 indicate a favorable outlook for sustained financial performance.

Accuray Inc's financial outlook has deteriorated, highlighted by a first-quarter product revenue of $37.2 million, which fell short of expectations largely due to weaknesses in the EIMEA and China markets. Geopolitical pressures have adversely affected the company's operations, resulting in a reduced revenue outlook and significantly lower orders from the China joint venture, with only 11 systems delivered in the second fiscal quarter compared to 27 in the previous year. The company's EBITDA also undershot estimates at approximately -$4 million, emphasizing ongoing challenges with product gross margins affected by geographic mix and joint venture accounting, leading to a cautious stance on future orders and revenue forecasts.