A month has gone by since the last earnings report for Accuray (ARAY). Shares have lost about 1% 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 Reports Loss in Q4, Fiscal 2020 Guidance Slashed
Accuray reported fourth-quarter fiscal 2019 adjusted loss of 2 cents per share against the Zacks Consensus Estimate of earnings per share (EPS) of 3 cents. The company had reported a loss of a penny in the year-ago quarter.
Net revenues of the company totaled $117.4 million, surpassing the Zacks Consensus Estimate by 1.1%. On a year-over-year basis, revenues climbed 3.2%.
Fiscal Q4 Details
Product Revenues: Product revenues increased 11% year over year to $60.6 million in the reported quarter on strong demand for the Radixact system.
Service Revenues: Service revenues totaled $56.8 million, down 4% from the year-ago quarter.
Gross Order Update: Gross orders in the fiscal fourth quarter totaled $97.2 million, up 0.8% year over year. The upside was driven by strong demand for Radixact, CyberKnife and TomoTherapy platforms. Radixact accounted for approximately 60% of total gross orders while CyberKnife grew double digits.
U.S. gross orders declined in the reported quarter while that in EMEA grew mid-single digits.
Gross profit in the fiscal fourth quarter totaled $45.9 million, down 4.3% on a year-over-year basis. Gross margin was 39.1%, highlighting a contraction of 310 basis points (bps) year over year.
Research and development expenses rose 10% year over year to $16.1 million. Selling and marketing expenses declined 11.5% to $14.9 million. General and administrative expenses contracted 13% to $11.7 million.
Fourth-quarter operating profit was $3.3 million, up 5.3% from the year-ago quarter. Operating margin was 2.8%, up 10 bps year over year.
The company exited fourth-quarter fiscal 2019 with total cash, cash equivalents, and short-term restricted cash of $87 million, compared with $22.4 million at the end of Mar 31, 2019.
For fiscal 2020, Accuray expects revenues within $410-$420 million. Per management, Accuray has slashed its guidance by 1.5%. The company expects revenues from EMEA and Japan to remain flat or slightly below the fiscal 2019 levels. In the United States, Accuray expects modest revenue growth in fiscal 2020.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -866.67% due to these changes.
At this time, Accuray has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile 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.
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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