Please ensure Javascript is enabled for purposes of website accessibility

Why Accuray Shares Are Soaring Today

By Keith Speights - Jan 29, 2020 at 11:35AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors liked the medical device maker's better-than-expected Q2 results.

What happened

Shares of Accuray (ARAY -2.97%) were soaring 15.6% higher as of 11:03 a.m. EST on Wednesday with investors liking what they saw with the medical device maker's fiscal 2020 second-quarter results. Accuray announced its Q2 results after the market closed on Tuesday.

The company reported revenue for the quarter of $98.8 million, down a little from the prior-year period but higher than analysts expected. Accuray also posted earnings of $10.7 million, or $0.12 per share, which was much better than the consensus Wall Street estimate of a net loss of $0.07 per share.

There was also good news with Accuray's full-year 2020 outlook. While the company maintained its full-year revenue guidance of between $410 million and $420 million, it boosted its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance. Accuray now expects full-year adjusted EBITDA of between $21 million and $26 million, higher than its previous projection of $19 million to $24 million.

Accuray Radixact medical device

Image source: Accuray.

So what

Perhaps the most important takeaway from Accuray's Q2 results is that they reinforce the impression among investors that the company is making a strong comeback from its dismal 2019 performance. Beating Wall Street estimates goes a long way in establishing confidence that Accuray is on the right track.

However, there's more to the story with the company's big earnings beat. Accuray's net income in Q2 included a $13 million gain related to its investment in a China joint venture. Without this gain, the company would have recorded a net loss in the second quarter.

Still, though, Accuray delivered a better-than-expected performance across the board in Q2. Its adjusted EBITDA, which excludes the impact of the one-time gain from the China joint venture, jumped to $7.1 million from $4.1 million in the prior-year period. That's the kind of progress that investors like to see. 

Now what

Probably the main thing to watch with Accuray now is how uncertainty in China impacts the company's sales. Some healthcare stocks could be very volatile with the threat of the coronavirus that originated in China becoming a pandemic. However, Accuray CEO Joshua Levine said that the concerns about the virus shouldn't impact the long-term demand for his company's radiation therapy products in China.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Accuray Incorporated Stock Quote
Accuray Incorporated
ARAY
$1.96 (-2.97%) $0.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
317%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.