Why Is Accuray (ARAY) Down 15.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Accuray (ARAY). Shares have lost about 15.2% 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 Q4 Earnings and Revenues Lag Estimates
Accuray reported loss per share of 3 cents for the fourth quarter of fiscal 2023, narrower than the year-ago period’s loss of 4 cents per share. However, the metric lags the Zacks Consensus Estimate of a breakeven earnings per share.
Full-year adjusted loss per share was 10 cents, wider than the loss of 6 cents per share at the end of the comparable fiscal 2022 period. The loss per share was also wider than the Zacks Consensus Estimate of a loss of 7 cents per share.
Revenues in Detail
Accuray registered revenues of $118.3 million in the fourth quarter of fiscal 2023, up 7.5% year over year. However, the figure lagged the Zacks Consensus Estimate by 2.6%.
The overall top-line growth was aided by robust segmental revenues and performances by the majority of geographies.
At constant exchange rate (CER), net revenues were $120.1 million, representing a 9.1% increase from the prior-year period.
Full-year revenues were $447.6 million, reflecting a 4.1% improvement from the comparable fiscal 2022 period. However, the figure lagged the Zacks Consensus Estimate by 0.7%.
Segmental Details
Accuray derives revenues from two sources — Products and Services.
In the fiscal fourth quarter, Product revenues improved 7.6% from the year-ago quarter to $62.5 million. At CER, Product revenues improved 9%.
Services revenues rose 7.4% from the year-ago quarter to $55.8 million. At CER, Services revenues were up 9%.
Gross product orders totaled $88.4 million, up 0.1% year over year.
Margin Trend
In the quarter under review, Accuray’s gross profit fell 12.4% to $37.7 million. Gross margin contracted 725 basis points to 31.9%.
Selling and marketing expenses fell 25.7% to $10.7 million. Research and development expenses fell 2.6% year over year to $14.2 million, while general and administrative expenses went up 10.3% year over year to $13.3 million. Total operating expenses of $38.1 million decreased 6.9% year over year.
Operating loss totaled $0.5 million in the fiscal fourth quarter against the prior-year quarter’s operating profit of $2 million.
Financial Position
Accuray exited fiscal 2023 with cash and cash equivalents of $89.4 million compared with $88.7 million at the end of fiscal 2022.
Total debt (including short-term debt) at the end of fiscal 2023 was $177.3 million compared with $180.5 million at the fiscal 2022-end.
FY24 Guidance
Accuray has initiated its outlook for fiscal 2024 based on current expectations.
The company expects its fiscal year revenues to be $460 million-$470 million, reflecting year-over-year growth of 3-5%. The Zacks Consensus Estimate for the same is pegged at $474.9 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -233.33% due to these changes.
VGM Scores
At this time, Accuray has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Accuray has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Accuray is part of the Zacks Medical - Instruments industry. Over the past month, Penumbra (PEN), a stock from the same industry, has gained 16.6%. The company reported its results for the quarter ended June 2023 more than a month ago.
Penumbra reported revenues of $261.5 million in the last reported quarter, representing a year-over-year change of +25.5%. EPS of $0.43 for the same period compares with $0.01 a year ago.
For the current quarter, Penumbra is expected to post earnings of $0.45 per share, indicating a change of +4400% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Penumbra. Also, the stock has a VGM Score of F.
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