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Accuray (ARAY) Earnings and Revenues Beat Estimates in Q3

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Accuray Incorporated ARAY reported third-quarter fiscal 2020 adjusted earnings per share (EPS) 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 on a15% increase in Europe, the Middle East and Asia.

Accuray Incorporated Price, Consensus and EPS Surprise

 

Accuray Incorporated Price, Consensus and EPS Surprise
Accuray Incorporated Price, Consensus and EPS Surprise

 

Accuray Incorporated price-consensus-eps-surprise-chart | Accuray Incorporated Quote

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 declined 13.5% year over year to $11.2 million. Selling and marketing expenses contracted 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%, showing 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 fiscal second quarter.

 2020 Guidance

Considering the continued spread of the COVID-19 pandemic and the uncertainty of its impact on the global economy and the healthcare industry, Accuray decided to withdraw its 2020 financial guidance for revenues and adjusted EBITDA.

 Our Take

Accuray exited the fiscal third quarter on a strong note. Solid demand for the Radixact, CyberKnife and TomoTherapy platforms continues to drive the top line. We are also upbeat about the company’s gross order growth on solid momentum in EMEA. The company registered double-digit year-over-year revenue growth within the American markets. Expansion in both margins is encouraging as well.

On the flip side, the year-over-year decline in the top line is concerning. In fact, Accuray saw decline in Product and Service revenues in the quarter.

Zacks Rank and Key Picks

Accuray currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are Pacific Biosciences of California, Inc. PACB, ViewRay VRAY and ResMed Inc. RMD, each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Pacific Biosciences’ first-quarter 2020 revenues is pegged at $20.1 million, suggesting year-over-year improvement of 22.3%. The same for loss stands at 15 cents, indicating a year-over-year riseof 25%.

The Zacks Consensus Estimate for ViewRay’s first-quarter 2020 revenues is pegged at $12.5 million, suggesting a year-over-year fall of 38.5%. The same for loss stands at $20 cents, indicating year-over-year improvement of 41.2%.

The Zacks Consensus Estimate for ResMed’s third-quarter fiscal 2020 revenues is pegged at $722.3 million, suggesting year-over-year improvement of 9.1%. The same for EPS stands at $1.04, indicating growth of 16.9% from the year-ago reported figure.

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Accuray Incorporated (ARAY) : Free Stock Analysis Report
 
ResMed Inc. (RMD) : Free Stock Analysis Report
 
Pacific Biosciences of California, Inc. (PACB) : Free Stock Analysis Report
 
ViewRay, Inc. (VRAY) : Free Stock Analysis Report
 
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