Ahead of Q4 earnings, Byron's Loe maintains Top Pick rating on IMRIS

Byron Capital analyst Douglas Loe says he is cautiously optimistic that IMRIS can sustain recent VIVIUS order flow into fiscal 2013.

After market close tomorrow, IMRIS (TSX:IM) will release its Q4 and fiscal 2012 results. The soon to be Minneapolis-based company is coming off a Q3 in which it lost $8.5-million on revenues of $11.6-million. While the loss was the same as the year prior, the most recent quarter’s topline of $11.6-million was significantly higher than the $7.2-million the company posted in Q3, 2011.

In its Q3 summary, management said it expected that strengthening bookings of its VISIUS Surgical Theatres would continue, and that its forecast for 2012 annual revenues would be in the $53-million to $54-million range, meaning it expects Q4 revenue to come in at more than $20-million, since its nine-months revenue to date is $32.3 -million.

Byron Capital analyst Douglas Loe says he expects IMRIS’s revenue will be in line with its own guidance. He pegs the number at $21.6 million. But Loe cautions that the revenue number is not the main attraction tomorrow. He says what interests him most is the backlog build of VISIUS as a measure for future revenue and EBITDA, and says he is cautiously optimistic that IMRIS can sustain recent VIVIUS order flow into fiscal 2013. In a research update to clients this morning Loe maintained his BUY rating and TOP PICK status, and his $8 target on IMRIS.

IMRIS was founded in 1998 in order to commercialize research done by MRI pioneer Dr. Garnette Sutherland at the University of Calgary. The company, which now has more than forty 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 cost of up to $12 million each, they’re not cheap, the units do allow an MR or CT scanner to be shared by more than one clinical suite, meaning they can prove to be more economical than current solutions.

Loe says he is encouraged that IMRIS recently added eight VISIUS sales, increasing its order backlog to $84.7-million, which is up $26.1-million year-to-date. He says his $8 target is based on the company’s Net Present Value, minus a 17.5% discount rate, 20x EPS and 12.5x his estimate of the company’s EV/EBITDA for fiscal 2014.

Shares of IMRIS on the TSX closed today up .2% to $4.26.

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