Accuray shares rise on UBS upgrade

AP News
Posted: Dec 09, 2009 3:20 PM

Shares of Accuray Inc. rose Wednesday after a UBS analyst upgraded the maker of medical radiation equipment, citing stable orders of the company's CyberKnife system.

UBS analyst Erik Schneider raised his rating to "Neutral" from "Sell" and reaffirmed a $6 share price target.

Shares of Accuray jumped 21 cents, or 4 percent, to $5.49 in afternoon trading. The stock has traded between $3.78 and $8.35 over the last 52 weeks.

Accuray specializes in a form of radiation technology that relies on a robotic system to treat cancerous tumors with more precision to minimize the damage to healthy tissue. The CyberKnife system beams large doses of radiation into tumors, killing them without surgery and making some treatments into outpatient procedures.

In August, the company gave a weak outlook for the fiscal year. Wall Street grew concerned over the company's shrinking backlog of orders for the CyberKnife system.

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"Installations of new units drive current and future revenues," Schneider said in a note to investors. "In addition to current revenues, CyberKnife installs drive a growing contribution from service revenue, which we calculate represents over 30 percent of core revenues, and create future system replacement opportunities."

He added that quarterly volatility will remain, but investors now have a reasonable basis for nearterm expectations for CyberKnife revenue.