) reached 52-week high of $10.71 after the market closed on Jan
31 following the release of its turnaround fiscal 2014-second
quarter results and promising guidance.
Accuray posted a much narrower loss of $5.4 million, or 7 cents
per share for the quarter compared with a loss of $25.5 million,
or 35 cents per share for the same quarter in the prior fiscal
year as well as the Zacks Consensus Estimate of a loss of 20
cents per share. The narrower loss can be attributable to higher
revenues and a substantial fall in operating expenses during the
Total revenue grew 20.4% to $93.6 million, surpassing the Zacks
Consensus Estimate of $81.0 million significantly.
revenues surged 36.1% to $45.1 million while
revenues rose 8.7% to $45.5 million.
The improvement in Product revenues was attributable to
impressive rise in product orders. Gross product orders almost
doubled (102%) to $80.3 million in the quarter while net product
orders (gross orders less cancellations and age-outs) soared 232%
to $59.4 million in the second quarter.
At the end of the quarter, product backlog was $362 million,
up roughly 30% from the backlog at the end of the fiscal
2013-second quarter. The increase in Service revenues was driven
by the higher installed base and conversion of customers to
emerald and diamond service contracts.
ABIOMED INC (ABMD): Free Stock Analysis
ANGIODYNAMICS (ANGO): Free Stock Analysis
ACCURAY INC (ARAY): Free Stock Analysis
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Total gross profit surged 43.4% to $38.2 million while total
gross margin improved 660 basis points (bps) to 40.8% from 34.2%
in the year ago quarter. The overall gross margin comprised of
product gross margin of 44.7% and service gross margin of 37.1%
compared with product gross margin of 44.0% and service gross
margins of 26.9% for the fiscal 2013-second quarter.
The improvement in Product gross margin was attributable to
higher volume and stronger average selling prices. On the other
hand, the rise in Service gross margin was attributable to
TomoTherapy Systems reliability improvement, which led to lower
parts consumption and sales of higher margin service contracts.
Operating expenses dipped 20.5% to $38.9 million in the fiscal
second quarter due to continued expense control. It is even lower
than Accuray's guidance of about $40 million per quarter. As a
result, operating loss significantly narrowed to $716 thousand
from $22.3 million a year ago.
Accuray exited the quarter with cash, cash equivalents and
investments of $159.6 million, which is lower than $174.4 million
as of Jun 30, 2013. Long-term debt inched up 1.2% to $201.1
million as of Dec 31, 2013 from $198.8 million as of Jun 30,
2013. Consequently, long-term debt-to-capitalization ratio
increased 290 bps to 67.9% from 65.0% as of Jun 30, 2013.
For fiscal 2014, Accuray upgraded its total revenue guidance to a
range of $340 to $350 million from the prior range of $325 to
$345 million based on its performance in the first half of fiscal
2014 and optimism triggered by the continued momentum of
converting orders to revenue. The current Zacks Consensus
Estimate of $344 million lies within the guided range.
However, Accuray expects lower net orders in second half of
fiscal 2014 compared with the net orders in the first half of the
fiscal year. With this, Accuray expects to end the fiscal year
with net product orders of $215 to $225 million, reflecting a
25-31% growth over the prior fiscal year.
We are impressed with Accuray's achievement in improving product
order momentum in the second quarter of fiscal 2014. This is
indicative of healthy adoption of the company's new products.
Additionally, Accuray's restructuring efforts and healthy service
revenues and gross margin are also helping it to stabilize.
However, Accuray remains susceptible to weak global markets and
reimbursement uncertainties, and faces stiff challenges from
competitors' product offerings.
Currently, Accuray carries a Zacks Rank #3 (Hold). Some
better-ranked medical instrument stocks include
Natus Medical Inc.
). Natus Medical carries a Zacks Rank #1 (Strong Buy), while both
ABIOMED and AngioDynamics carry a Zacks Rank #2 (Buy).