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Why Is Accuray (ARAY) Down 9.8% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Accuray Incorporated (ARAY - Free Report) . Shares have lost about 9.8% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Accuray Incurs Loss in Q3, Revenues Miss Estimates
Accuray Inc. (ARAY - Free Report) reported a loss of $0.06 per share in the third quarter of fiscal 2017, comparing unfavorably with the Zacks Consensus Estimate of earnings of $0.01. The figure was also significantly lower than earnings of $0.01 in the year-ago quarter.
Total revenue in the third quarter decreased approximately 7.6% year over year to $97 million and missed our estimate of $117 million. The decline was primarily due to lower sales as well as product and channel mix.
Segment Details
Product Revenues:The downside in revenues was more reflected in product revenues that decreased 10.6% to $48 million ($53.7 million in the second quarter). Product revenues in both the U.S. and Japan were significantly above the prior-year quarter. However, China and Europe delivered a sluggish revenue performance in the quarter.
Service Revenues: Revenues at the segment decreased 4.4% to 49.3 million year over year. Per management, the decrease in revenues was primarily due to lower installations.
Gross Order Update: In the reported quarter, gross product orders totaled $83.8 million, compared with $56.4 million in the prior-year quarter. At the end of the quarter, product backlog was $450 million, approximately 21% higher year over year. Gross order performance was favorably impacted by the company’s flagships Radixact Systemand CyberKnife System orders.
Other Highlights
The company’s new TomoTherapy product platform, also known as Radixact, continued to contribute to the company’s top line. The platform gained Japanese regulatory approval (Shonin approval) and is expected to start formal treatments from the fourth quarter.
Onrad, Accuray’s second new product, also provided a modest contribution to gross orders.
Coming to the CyberKnife platform, this represented approximately 50% of gross orders in the quarter, courtesy of its M6 system.
Margin Details
Gross margin (as a percentage of net revenues) contracted 620 basis points (bps) in the third quarter to 36.4%. This was primarily driven by reduced product gross margins.
Product gross margin (as a percentage of product revenues) decreased 650 bps over the prior year to 38%, primarily driven by lower overall unit sales volumes.
Service gross margins in the fiscal third quarter were 34.4%, down 600 bps on a year-over-year basis.
Operating expenses for the quarter were $36.7 million, down 7% on year-over-year basis.
Balance Sheet
Accuray had $84.1 million of cash and investments as of Mar 31, 2017, reflecting a decrease of $24.3 million from Dec 31, 2016.
Guidance
Accuray projects full-year revenues in the band of $380 million to $390 million. This is lower than the previously provided guidance of $410.0 million to $420.0 million.
The company expects 5% increase in gross orders for fiscal 2017. The product system backlog is expected in the band of $445 million to $460 million.
Adjusted EBITDA for fiscal 2017 is anticipated in the range of $22 million to $26 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, Accuray's stock has a poor score of 'F', on both growth and momentum front. Following a similar course, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
The stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.
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Why Is Accuray (ARAY) Down 9.8% Since the Last Earnings Report?
It has been about a month since the last earnings report for Accuray Incorporated (ARAY - Free Report) . Shares have lost about 9.8% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Accuray Incurs Loss in Q3, Revenues Miss Estimates
Accuray Inc. (ARAY - Free Report) reported a loss of $0.06 per share in the third quarter of fiscal 2017, comparing unfavorably with the Zacks Consensus Estimate of earnings of $0.01. The figure was also significantly lower than earnings of $0.01 in the year-ago quarter.
Total revenue in the third quarter decreased approximately 7.6% year over year to $97 million and missed our estimate of $117 million. The decline was primarily due to lower sales as well as product and channel mix.
Segment Details
Product Revenues:The downside in revenues was more reflected in product revenues that decreased 10.6% to $48 million ($53.7 million in the second quarter). Product revenues in both the U.S. and Japan were significantly above the prior-year quarter. However, China and Europe delivered a sluggish revenue performance in the quarter.
Service Revenues: Revenues at the segment decreased 4.4% to 49.3 million year over year. Per management, the decrease in revenues was primarily due to lower installations.
Gross Order Update: In the reported quarter, gross product orders totaled $83.8 million, compared with $56.4 million in the prior-year quarter. At the end of the quarter, product backlog was $450 million, approximately 21% higher year over year. Gross order performance was favorably impacted by the company’s flagships Radixact Systemand CyberKnife System orders.
Other Highlights
The company’s new TomoTherapy product platform, also known as Radixact, continued to contribute to the company’s top line. The platform gained Japanese regulatory approval (Shonin approval) and is expected to start formal treatments from the fourth quarter.
Onrad, Accuray’s second new product, also provided a modest contribution to gross orders.
Coming to the CyberKnife platform, this represented approximately 50% of gross orders in the quarter, courtesy of its M6 system.
Margin Details
Gross margin (as a percentage of net revenues) contracted 620 basis points (bps) in the third quarter to 36.4%. This was primarily driven by reduced product gross margins.
Product gross margin (as a percentage of product revenues) decreased 650 bps over the prior year to 38%, primarily driven by lower overall unit sales volumes.
Service gross margins in the fiscal third quarter were 34.4%, down 600 bps on a year-over-year basis.
Operating expenses for the quarter were $36.7 million, down 7% on year-over-year basis.
Balance Sheet
Accuray had $84.1 million of cash and investments as of Mar 31, 2017, reflecting a decrease of $24.3 million from Dec 31, 2016.
Guidance
Accuray projects full-year revenues in the band of $380 million to $390 million. This is lower than the previously provided guidance of $410.0 million to $420.0 million.
The company expects 5% increase in gross orders for fiscal 2017. The product system backlog is expected in the band of $445 million to $460 million.
Adjusted EBITDA for fiscal 2017 is anticipated in the range of $22 million to $26 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Accuray Incorporated Price and Consensus
Accuray Incorporated Price and Consensus | Accuray Incorporated Quote
VGM Scores
At this time, Accuray's stock has a poor score of 'F', on both growth and momentum front. Following a similar course, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
The stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.