The 5 Dumbest Things on Wall Street This Week: Jan. 11

3. Accuray Disarray

It may be a brand new year, yet our analyst friends on Wall Street are still up to the same old tricks.

Or as we say here at The Dumbest Lab: The more things change, the more they stay inane.

Take the case of poor, poor Accuray (ARAY), for example.

The company has lost nearly a third of its stock-market value since last Friday after it announced that it anticipates fiscal second-quarter revenue of $72 million to $75 million compared to the $94 million Wall Street analysts were expecting. The company's brass blamed problems with its sales force, manufacturing and supply chain -- basically everything up to and including the leaky kitchen sink -- for the sales shortfall.

For the 2013 fiscal year, Accuray expects a loss of 87 to 95 cents per share on revenue of $320 million to $330 million. Analysts were on record predicting the company would post an adjusted loss of 55 cents per share on revenue of $406 million for the year.

Yep, Accuray proved its analyst followers to be anything but accurate with their forecasts. Nevertheless, despite the stock's shellacking, Accuray's fans on Wall Street remained resolute.

In his note titled "No visibility, but can't get much cheaper," Lazard Capital Markets analyst Sean Lavin opined: "While we and it seems management have limited visibility on future orders and revenue, we remain at 'buy' given the shares were trading at just 0.88x in afterhours vs. our 12-24 month revenue estimate. That said, we believe the upside outweighs the downside. We see an investment in Accuray as one with significant potential upside, but also a lot of risk."

Um, sorry Sean, but if the stock "can't get much cheaper," then how is there "also a lot of risk"? It seems to us like there is a bit of a disconnect there, dontcha think?

Jefferies analyst Raj Denhoy offered even more of a head-scratcher for his loyal hangers-on. Denhoy kept his "buy" rating on the stock while drastically reducing his price target to $6.50 from $10, saying: "The reset under new management was expected but the severity was a surprise."

Thanks, Raj. That's like saying: "We expected the company to kick its shareholders in the groin; we just didn't think it would be that hard."

Come on, guys. There's no need to experiment with any new excuses for your bad calls simply because it's a new year. Stick with the classic and you'll be fine. Simply say: "We loved Accuray as a 'buy' at $7, but we really love it at $4.80."

What's so hard about that?

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