Byron’s Loe maintains BUY on IMRIS, lowers price target to $7.50

IMRIS CEO David GravesYesterday, magnetic resonance equipment manufacturer IMRIS (TSX:IM) announced it had closed its underwritten public offering of 5.75 million common shares at (U.S.) $3.50 per share, for gross proceeds of approximately (U.S.) $20.1-million.

The company said it intends to use the cash infusion for working capital, commercialization activities of new products, and research and development programs.

The news followed IMRIS’s Q4 and fiscal 2012 numbers, which were released March 5th, and showed that the company generated consolidated revenue of $20.1 million, $18.5-million of which came from sales of its VISIUS surgical theatre system.

Byron Capital analyst Douglas Loe says IMRIS’s Q4 revenue was below the $21.6-million he expected, but says he is still positive about VISIUS’s competitive positioning and market potential in multiple surgical and interventional markets. But Loe says the company’s revised capital structure following the financing slightly changes his target. In a research update to clients today, low maintained his BUY rating on IMRIS, but lowered his price target by fifty cents, to $7.50.

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, but 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 going forward investors should watch for signals that high volume surgical hospitals are adopting VISIUS, and signs that partners such as Varian and Macdonald Dettwiler are advancing their robot-MR and radiation therapy-MR hybrid systems.

Shares of IMRIS on the TSX closed today up 5.6% to $3.60.

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