Accuray shares plunge on weak quarter

Accuray shares plunge on weak quarter

Stock Market Predictions

BANGALORE (Global Markets) - Shares of Accuray Inc (ARAY.O) sank 13 percent on Friday morning, a day after the CyberKnife system maker posted a quarterly loss that missed expectations.

The CyberKnife system, used to treat cancer, applies high doses of radiation to destroy the tumors.

"The reason for the shares slide is that the market thinks this is a distracted company," Soleil Securities' senior medical technology analyst Junaid Husain told Global Markets.

The company is in the middle of integrating rival TomoTherapy Inc (TOMO.O) which it had acquired for about $277 million in March to expand its operations in the radiation oncology field.

Analysts said the Tomotherapy deal should add to Accuray's earnings in fiscal 2012, a year earlier than previously anticipated.

"We view the TomoTherapy deal favorably as its service margins are trending in the proper direction and believe it will add significant scale to Accuray," Stephens analyst Drew Jones, who maintained his 'overweight' rating on Accuray stock, wrote in a note.

However, while providing scale and some technical and financial synergies, the combined company will still be smaller than the other three players in the space: Varian (VAR.N), Siemens (SIEGn.DE) and Elekta (EKTAb.ST), and will still face formidable competition, J.P.Morgan analyst Tycho Peterson said in a note.

Shares of California-based Accuray were down 10 percent at $8.04 on Friday afternoon on Nasdaq after falling to a low of $7.72.

(Reporting by Rajarshi Basu in Bangalore; Editing by Sriraj Kalluvila)