Why Is Accuray (ARAY) Down 28.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Accuray (ARAY). Shares have lost about 28.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Accuray due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Accuray Earnings Top Estimates in Q2, Gross Margin Expands
Accuray reported second-quarter fiscal 2020 adjusted earnings per share of a penny, comparing favorably with the Zacks Consensus Estimate of a loss of 7 cents. The company had reported a loss of 5 cents a year ago.
Net revenues of this company totaled $98.8 million, edging past the Zacks Consensus Estimate of $98.5 million. On a year-over-year basis, revenues dropped 3.4%.
Fiscal Q2 Details
Product Revenues: Product revenues fell 8.9% year over year to $43.8 million in the reported quarter.
Service Revenues: Service revenues totaled $55.1 million, up 1.5% from the year-ago quarter.
Gross Order Update: Gross orders in the fiscal second quarter totaled $98.6 million, down 1.6% year over year. However, per management, gross orders in the quarter were above the projected range of $87-$90 million, driven by CyberKnife and Radixact platforms.
Margins
Gross profit in the fiscal second quarter totaled $37.9 million, down 1.3% on a year-over-year basis. Gross margin was 38.4%, highlighting an expansion of 90 basis points (bps) year over year.
Research and development expenses contracted 4.2% year over year to $13.1 million. Selling and marketing expenses declined 25.2% to $11.3 million. General and administrative expenses contracted 5.6% to $9.9 million.
Second-quarter operating income was $3.6 million against a loss of $868,000 in the year-ago quarter.
Cash Position
The company exited second-quarter fiscal 2020 with total cash, cash equivalents, and short-term restricted cash of $99.1 million, compared with $86.7 million at the end of Sep 30, 2019.
Guidance
Accuray continues to expect revenues within $410-$420 million for fiscal 2020.
Management expects higher revenue growth in the second half of fiscal 2020, compared to the first half.
Adjusted EBITDA for fiscal 2020 is expected within $21-$26 million.
How Have Estimates Been Moving Since Then?
Estimates review followed a downward path over the past two months. The consensus estimate has shifted -366.67% due to these changes.
VGM Scores
At this time, Accuray has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Accuray has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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