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Why Is Accuray (ARAY) Up 9.9% 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 added about 9.9% in that time frame.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? 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 catalysts.
Recent Earnings
Accuray Inc. reported a loss of 6 cents per share in the fourth quarter of fiscal 2017, wider than the Zacks Consensus Estimate of loss of a penny. However, the figure was relatively narrower than the loss of 9 cents in the year-ago quarter.
Total revenue in the fourth quarter increased approximately 18% year over year to $112.1 million and beat our estimate of $111 million. The year-over-year growth was primarily driven by solid prospects in the Americas and APAC regions.
Accuray also reported its fiscal 2017 results. For the fiscal, total revenue decreased 3.9% on a year-over-year basis to $383.4 million. Service revenues (53.2% of net revenues) totaled $203.8 million, while product revenues (46.8% of net revenues) totaled $179.6 million in the fiscal.
Segment Analysis
Product Revenues: Revenues at the segment increased 38% to $60.6 million. System order conversions of backlog to revenue in the Americas and APAC regions buoyed growth in the segment. Solid performances in the CyberKnife, TomoTherapy Systems and Radixact platforms are the key highlights of the segment.
Service Revenues: Revenues at the segment saw a modest year-over-year increase of 1% to $51.5 million. Per management, lackluster performance at the segment was primarily due to lower installations.
Gross Order Update: In the reported quarter, gross product orders totaled $85.7 million, increasing 5% on a year-over-year basis. At the end of the quarter, product backlog was $452.8 million, approximately 12% higher year over year. Gross order performance was favorably impacted by the company’s flagship Radixact System and the CyberKnife System with the InCise Multileaf Collimator.
Other Highlights
Radixact Platform Drove Sales: The company’s new TomoTherapy product platform, also known as Radixact, continued to contribute to the company’s top line. Radixact represented majority of Accuray’s TomoTherapy order mix in the reported quarter, up 25% on a sequential basis from the third quarter.
APAC and Japan witnessed stellar performances at the Radixact and TomoTherapy platforms. Radixact orders in Japan have been extremely positive to date.
The Precision System: Accuray also announced its new precision treatment planning system recently. The system leverages on the company’s flagship Radixact and CyberKnife system platforms. The company also plans to build on this technology with Precision 2.0 upgrade by fiscal 2018. This will provide significant improvements in treatment speed and overall throughput of the already existing CyberKnife system.
IBMS Data Management System for TomoTherapy: Accuray also announced 510(k) clearance for the new IBMS data management system for TomoTherapy. It is a centralized database that shares and makes data accessible between multiple accurate systems adding flexibility and improving workflow efficiency in the radiation therapy department.
Margin Details
Gross margin (as a percentage of net revenues) contracted 80 basis points (bps) in the fourth quarter to 36.4%. This was primarily due to reduced product gross margins. Product gross margins decreased due to unfavorable product and channel mix.
Operating expenses in the fourth quarter were $40.4 million, almost flat with $40.3 million in the year-ago period.
Guidance
Accuray issued guidance for fiscal 2018.
The company projects full-year revenues in the band of $390 million to $400 million. This represents growth in the band of approximately 2% and 4% on a year-over-year basis. Furthermore, product revenues are expected to increase in the band of 5% to 10% year over year and service revenues are likely to remain flat with fiscal 2017.
The company expects a 5% increase in gross orders in fiscal 2018. 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 $25 million to $30 million, up 23% to 47% year over year.
How have estimates been moving since then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
At this time, Accuray's stock has a strong Growth Score of A, however its Momentum is lagging a lot with a F. The stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Zacks' style scores indicate that the company's stock is more suitable for growth than value investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Why Is Accuray (ARAY) Up 9.9% Since the Last Earnings Report?
It has been about a month since the last earnings report for Accuray Incorporated (ARAY - Free Report) . Shares have added about 9.9% in that time frame.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? 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 catalysts.
Recent Earnings
Accuray Inc. reported a loss of 6 cents per share in the fourth quarter of fiscal 2017, wider than the Zacks Consensus Estimate of loss of a penny. However, the figure was relatively narrower than the loss of 9 cents in the year-ago quarter.
Total revenue in the fourth quarter increased approximately 18% year over year to $112.1 million and beat our estimate of $111 million. The year-over-year growth was primarily driven by solid prospects in the Americas and APAC regions.
Accuray also reported its fiscal 2017 results. For the fiscal, total revenue decreased 3.9% on a year-over-year basis to $383.4 million. Service revenues (53.2% of net revenues) totaled $203.8 million, while product revenues (46.8% of net revenues) totaled $179.6 million in the fiscal.
Segment Analysis
Product Revenues: Revenues at the segment increased 38% to $60.6 million. System order conversions of backlog to revenue in the Americas and APAC regions buoyed growth in the segment. Solid performances in the CyberKnife, TomoTherapy Systems and Radixact platforms are the key highlights of the segment.
Service Revenues: Revenues at the segment saw a modest year-over-year increase of 1% to $51.5 million. Per management, lackluster performance at the segment was primarily due to lower installations.
Gross Order Update: In the reported quarter, gross product orders totaled $85.7 million, increasing 5% on a year-over-year basis. At the end of the quarter, product backlog was $452.8 million, approximately 12% higher year over year. Gross order performance was favorably impacted by the company’s flagship Radixact System and the CyberKnife System with the InCise Multileaf Collimator.
Other Highlights
Radixact Platform Drove Sales: The company’s new TomoTherapy product platform, also known as Radixact, continued to contribute to the company’s top line. Radixact represented majority of Accuray’s TomoTherapy order mix in the reported quarter, up 25% on a sequential basis from the third quarter.
APAC and Japan witnessed stellar performances at the Radixact and TomoTherapy platforms. Radixact orders in Japan have been extremely positive to date.
The Precision System: Accuray also announced its new precision treatment planning system recently. The system leverages on the company’s flagship Radixact and CyberKnife system platforms. The company also plans to build on this technology with Precision 2.0 upgrade by fiscal 2018. This will provide significant improvements in treatment speed and overall throughput of the already existing CyberKnife system.
IBMS Data Management System for TomoTherapy: Accuray also announced 510(k) clearance for the new IBMS data management system for TomoTherapy. It is a centralized database that shares and makes data accessible between multiple accurate systems adding flexibility and improving workflow efficiency in the radiation therapy department.
Margin Details
Gross margin (as a percentage of net revenues) contracted 80 basis points (bps) in the fourth quarter to 36.4%. This was primarily due to reduced product gross margins. Product gross margins decreased due to unfavorable product and channel mix.
Operating expenses in the fourth quarter were $40.4 million, almost flat with $40.3 million in the year-ago period.
Guidance
Accuray issued guidance for fiscal 2018.
The company projects full-year revenues in the band of $390 million to $400 million. This represents growth in the band of approximately 2% and 4% on a year-over-year basis. Furthermore, product revenues are expected to increase in the band of 5% to 10% year over year and service revenues are likely to remain flat with fiscal 2017.
The company expects a 5% increase in gross orders in fiscal 2018. 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 $25 million to $30 million, up 23% to 47% year over year.
How have estimates been moving since then?
Analysts were quiet during the last two 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 strong Growth Score of A, however its Momentum is lagging a lot with a F. The stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Zacks' style scores indicate that the company's stock is more suitable for growth than value investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.