Byron Capital’s Loe says Despite Soft Quarter IMRIS Still a Buy

On Thursday, IMRIS (TSX:IM) reported its Q4 and fiscal 2011 results.

Across the board, the numbers were down; revenues in the fourth quarter were $14.7 million, down from the $24.8 million the company posted in the same period last year. And the full year topline came in at $51.8-million, down from $70.2-million. Earnings were also down, IMRIS lost $5 million in the Q4 and $20.9-million for the year compared to earnings of $1.0-million in Q4, 2010 and loss of $1.8-million for fiscal 2010.

Byron Capital Healthcare analyst Douglas Loe, however, says IMRIS may be emerging from a soft 2011 and building a solid order backlog. The company says it booked $22-million in orders in first sixty days of 2012 in addition to the already existing backlog of $95-million it had at the end of 2011. In a research note yesterday, Loe said IMRIS has provided reason enough to look beyond current softness and focus on the longer term picture, which he believes is still more than bright. Loe reiterated his BUY rating and $8 target on the stock.

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Winnipeg-based IMRIS was founded in 1998 to commercialize research done by MRI pioneer Dr. Garnette Sutherland at the University of Calgary. The company, which now has forty-three patents either issued or pending, designs and manufactures Magnetic Resonance Imaging Systems for use in operating rooms. The company’s VISIUS Surgical Theatre can incorporate MR imaging, CT imaging and x-ray angiography in a number of configurations. While, at an estimated cost of between $4 and $12 million, they’re not cheap, the units allow an MR or CT scanner to be shared by more than one clinical suite.

Loe believes IMRIS will benefit from not just the VISIUS line, but a robust R&D pipeline that includes an MR-robotic surgery system developed in collaboration with MacDonald Dettwiler, and the company’s NeuroArm division, which is still undergoing human testing at Calgary’s Foothills Hospital. Loe believes the device will launch in 2014. He projects that IMRIS’ revenue will top $143 million that year, generating EBITDA of $25.4 million.

Shares of IMRIS closed Friday up 1.5% to $2.71.

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