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Accuray (ARAY) Up 10.9% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Accuray (ARAY - Free Report) . Shares have added about 10.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Accuray due for a pullback? 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 catalysts.

Accuray Loss Wider Than Expected in Q1, Revenues Down Y/Y

Accuray reported first-quarter fiscal 2020 adjusted loss of 11 cents per share, wider than the Zacks Consensus Estimate of a loss of 10 cents. The company had reported a loss of 11 cents in the year-ago quarter.

Net revenues of the company totaled $89.6 million, missing the Zacks Consensus Estimate by 4.03%. On a year-over-year basis, revenues dropped 6.5%.

Fiscal Q1 Details

Product Revenues: Product revenues fell 9.4% year over year to $37.6 million in the reported quarter.

Service Revenues: Service revenues totaled $52 million, down 4.3% from the year-ago quarter.

Gross Order Update: Gross orders in the fiscal first quarter totaled $78.5 million, up 27.8% year over year. The upside was driven by strong demand for Radixact, CyberKnife and TomoTherapy platforms. Radixact accounted for more than 60% of the gross orders. Both EMEA and China made significant contributions to gross orders in the quarter.

Margins

Gross profit in the fiscal first quarter totaled $32.9 million, down 13% on a year-over-year basis. Gross margin was 36.8%, highlighting a contraction of 270 basis points (bps) year over year.

Research and development expenses contracted 3.9% year over year to $13.3 million. Selling and marketing expenses declined 1.8% to $13.3 million. General and administrative expenses contracted 32% to $10.6 million.

First-quarter operating loss was $4.3 million compared with a loss of $4.7 million in the year-ago quarter.

Cash Position

The company exited first-quarter fiscal 2020 with total cash, cash equivalents, and short-term restricted cash of $86.7 million, compared with $87 million at the end of Jun 30, 2019.

Guidance

For fiscal 2020, Accuray continues to expect revenues within $410-$420 million.

However, management expects revenue decline of 5-6% on a year-over-year basis in the first half of fiscal 2020 and solid revenue growth in the second half of fiscal 2020.

Adjusted EBITDA for fiscal 2020 is expected within $19-$24 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -21.21% due to these changes.

VGM Scores

Currently, Accuray has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Accuray has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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