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Why Is Accuray (ARAY) Down 9.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for Accuray (ARAY - Free Report) . Shares have lost about 9.2% 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 catalysts.

Accuray Q3 Earnings and Revenues Top Estimates

Accuray Incorporated  reported third-quarter fiscal 2020 adjusted earnings per share  of 3 cents comparing favorably with the Zacks Consensus Estimate of a loss of 3 cents. The company had reported a loss of penny a year ago.

Net revenues of the company totaled $99.5 million, edging past the Zacks Consensus Estimate of $96.5 million by 3.2%. On a year-over-year basis, revenues fell 3.6%.

Fiscal Q3 Details

Product Revenues: Product revenues fell 2.2% year over year to $45.5 million in the reported quarter.

Service Revenues: Service revenues totaled $54 million, down 4.9% from the year-ago quarter.

Gross Order Update: Gross orders in the fiscal third quarter totaled $106 million, up 27% year over year, driven by 15% increase in Europe, the Middle East and Asia.

Margins

Gross profit in the fiscal third quarter totaled $39.1 million, down 3.3% on a year-over-year basis. Gross margin was 39.3%, highlighting an expansion of 11 basis points (bps) year over year.

Research and development expenses declined1 3.5% year over year to $11.2 million. Selling and marketing expenses fell 13.9% to $11.1 million. General and administrative expenses decreased 24.4% to $8.9 million.

Third-quarter operating income was $7.9 million compared with $2.9 million in the year-ago quarter. Operating margin came in at 8.1%, an expansion of 521 bps.

Cash Position

The company exited third-quarter fiscal 2020 with total cash, cash equivalents, and short-term restricted cash of $91.6 million, compared with $99.1 million at the end of the year-end 2019.

 2020 Guidance

Considering  the continued progression of the COVID-19 pandemic and the uncertainty of  its  impact on the global economy and the healthcare industry, Accuray has  taken the decision of withdrawing its previous full fiscal year 2020 financial guidance regarding revenue and adjusted EBITDA.

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months. The consensus estimate has shifted 175% due to these changes.

VGM Scores

At this time, Accuray has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Accuray has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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