Accuray (ARAY) Stock Forecast & Price Target

Accuray Inc. has demonstrated a strong commitment to enhancing its Service revenue, which has shown consistent growth, with a notable increase of 4% year-over-year. This growth is primarily driven by robust contract revenue, rising 10% year-over-year, as well as improvements in pricing, product reliability, and reduced service costs. Furthermore, the company's focused strategy on system installations and revenue recognition is expected to yield significant benefits in the second half of FY26, contributing to a more favorable revenue growth and profitability profile, which in turn positively influences investor sentiment.

Accuray Inc reported product revenue of $37.2 million for the first fiscal quarter, which was below expectations due to weakened demand in the Europe, Middle East, India, and Africa (EIMEA) regions and China, exacerbated by ongoing geopolitical pressures. Management has reduced its revenue outlook, attributing this adjustment to the timing of customer orders and reduced orders from their China joint venture, where shipments of their CyberKnife technology were notably absent in the recent quarter. Additionally, the company posted an EBITDA loss of approximately $4 million, significantly underperforming against estimates, as product gross margins were negatively impacted by geographic revenue mix and joint venture accounting practices.