Yahoo Finance Accuray Incorporated Just Reported A Surprise Profit And Analysts Updated Their Estimates
Shareholders will be ecstatic, with their stake up 24% over the past week following Accuray Incorporated's (NASDAQ:ARAY) latest quarterly results. Accuray beat expectations by 2.3% with revenues of US$100m. It also surprised on the earnings front, with an unexpected statutory profit of US$0.03 per share a nice improvement on the losses that the analysts forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
View our latest analysis for Accuray
After the latest results, the consensus from Accuray's five analysts is for revenues of US$388.9m in 2021, which would reflect a discernible 4.1% decline in sales compared to the last year of performance. The company is forecast to report a statutory loss of US$0.10 in 2021, a sharp decline from a profit over the last year. Before this earnings announcement, the analysts had been modelling revenues of US$422.3m and losses of US$0.082 per share in 2021. So it's pretty clear the analysts have mixed opinions on Accuray after this update; revenues were downgraded and per-share losses expected to increase.
The average price target was broadly unchanged at US$6.20, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Accuray analyst has a price target of US$10.00 per share, while the most pessimistic values it at US$3.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with the forecast 4.1% revenue decline a notable change from historical growth of 1.6% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.9% next year. It's pretty clear that Accuray's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Accuray. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Accuray going out to 2022, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 5 warning signs with Accuray (at least 2 which don't sit too well with us) , and understanding these should be part of your investment process.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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