Accuray (ARAY) Up 2% Since Last Earnings Report: Can This Continue?

It’s been about a month since Accuray’s (ARAY) last earnings report. Shares rose about 2% in that time, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Accuray headed for a decline? 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 better understand the important catalysts.

Accurate third quarter earnings lag estimates, gross margin contracts

Accuray reported a loss per share of 6 cents for the third quarter of fiscal 2024, compared to earnings per share in the year-ago period. The figure also missed the Zacks Consensus Estimate of a loss of one penny per share.

Revenues in detail

Accuray reported revenue of $101.1 million in the third quarter of fiscal 2024, down 14.3% from the prior year. This number missed the Zacks Consensus Estimate by 11.8%.

Overall revenue growth was weighed down by lower revenues from both products and services.

At constant exchange rates (CER), net revenues were $102.4 million, a 13% decline compared to the prior-year period.

Segment details

Accuray generates revenue from two sources – products and services.

In the fiscal third quarter, product revenues declined 21.1% from the year-ago quarter to $49.6 million. This was mainly due to deliveries of eight units less year-on-year.

Services revenue declined 6.7% from the prior-year quarter to $51.5 million. At CER, service revenues decreased by 6%. This was due to $3 million in lower revenues related to installation, training, primarily related to fewer new U.S. installations and lower replacement parts volume.

Gross product orders were $89.1 million, up 20.8% year-over-year.

Margin trend

Accuray’s gross profit fell 24.9% to $29.1 million during the quarter. Gross margin decreased 405 basis points to 28.7%.

Sales and marketing expenses decreased 7.3% to $10.3 million. Research and development expenses decreased 23.2% year-over-year to $10.9 million, while general and administrative expenses increased 12.2% year-over-year to $12.4 million. Total operating expenses of $33.6 million decreased 7.6% year-over-year.

The fiscal third quarter’s operating loss was $4.6 million, compared to the prior-year quarter’s operating profit of $2.3 million.

Financial position

Accuray ended the third quarter of fiscal 2024 with cash and cash equivalents of $60.5 million, compared to $72.8 million at the end of the second fiscal quarter.

Total debt (including short-term debt) at the end of the third quarter of fiscal 2024 was $173.5 million, compared to $174.8 million at the end of the second fiscal quarter.

The story continues

Conductivity

Accuray lowered its fiscal 2024 revenue forecasts based on current expectations.

The company expects fiscal year revenue to be in the range of $432-$437 million, down from its previous guidance of $460-$470 million (reflecting year-over-year growth of 3-5%). The Zacks Consensus Estimate is $463.5 million.

How have estimates changed since then?

It turns out that estimate revisions have been trending downward over the past month.

As a result of these changes, the consensus estimate moved by -46.15%.

VGM results

Currently, Accuray has a solid Growth Score of B, although it lags well behind its Momentum Score of F. However, the stock is rated a C on the value side, ranking in the middle 20% in that range. investment strategy.

Overall, the stock has a Total VGM Score of C. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. It’s no surprise that Accuray has a Zacks Rank #5 (Strong Sell). We expect a below-average rate of return on stocks in the coming months.

Industry player performance

Accuray belongs to the Zacks Medical – Instruments industry. Another stock in the same industry, Integer (ITGR), has gained 10.7% over the past month. More than a month has passed since the company announced its results for the quarter ended March 2024.

In the most recent quarter, Integer saw revenue of $414.81 million, representing a year-over-year change of +9.5%. EPS of $1.14 in the same period compared to $0.87 a year ago.

For the current quarter, Integer is expected to report earnings per share of $1.24, representing a change of +8.8% from the prior-year quarter. The Zacks Consensus Estimate has changed +0% over the past 30 days.

The integer carries a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Rating of C.

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