On Apr 16, Zacks Investment Research upgraded
) to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold).
Why the Upgrade?
The earnings estimates for this California-based developer of
radiosurgery and radiation therapy systems have been revised
upward following its improved fiscal 2014-second quarter results
released on Jan 30.
Accuray reported adjusted loss per share of 7 cents for the
quarter, narrower than the Zacks Consensus Estimate loss of 20
cents by 65.0% and the prior-year quarter's loss by 82.5%.
Year-over-year loss narrowed primarily due to robust top-line
improvement of 20% from the year-ago period. Of the total
revenue, Accuray's product revenues surged 36% in the reported
quarter to $45.1 million, while service revenues totaled $48.5
million, representing an increase of 9%.
This happens to be the first quarter since the acquisition of
TomoTherapy when the company has achieved year-over-year revenue
growth. This revenue improvement is attributable to the company's
strength in order backlog, along with internal improvements
related to Accuray's revenue conversion management process.
In the second quarter, Accuray's total gross profit amounted to
$38.2 million, increasing 43% year over year. Gross margin of
40.8% also reflected an improvement of 660 basis points (bps). Of
the total gross margin, Accuray saw an enhanced product gross
margin of 44.7%, resulting from higher volume and stronger
average selling prices.
The company's service revenue margin also increased by 1020 bps
in the reported quarter, on account of improvement in TomoTherapy
Systems reliability, which drove lower parts consumption and
sales of higher margin service contracts.
Based on its encouraging performance, Accuray raised its total
revenue expectation for fiscal 2014 to $340-$350 million from the
previous range of $325-$345 million. The Zacks Consensus Estimate
of $344 million for the fiscal year lies within the current
expected revenue range of the company.
The Zacks Consensus Estimate for fiscal 2014 was revised upward
by 24% to a loss of 54 cents over the last three months. However,
the Zacks Consensus Estimate for fiscal 2015 was revised downward
by 43% to a loss of 10 cents over the same time frame.
Other Stocks to Consider
In the medical instruments space,
Delcath Systems, Inc.
Syneron Medical Ltd.
) are performing well. While Delcath and Syneron sport a Zacks
Rank #1 (Strong Buy), Hologic retains a Zacks Rank #2 (Buy).
ACCURAY INC (ARAY): Free Stock Analysis
DELCATH SYS INC (DCTH): Free Stock Analysis
SYNERON MED LTD (ELOS): Free Stock Analysis
HOLOGIC INC (HOLX): Free Stock Analysis
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