BTIG starts ViewRay at buy

BTIG Research launched coverage of ViewRay (NASDAQ:VRAY) with a “buy” rating and $6 price target. The stock closed at $3.58 on Tuesday.

MRIdian is the first commercial MRI guided radiation therapy treatment system available. “The image quality of the MRI is far superior to the imaging quality of the X-Ray and CT based systems today particularly with respect to soft-tissue cancers and anatomy,” writes analyst Dr. Sean Lavin.

He said MRI offers a greater range of available soft tissue contrast, depicts anatomy in greater detail, and is more sensitive and specific for abnormalities. MRIs also are much more helpful at depicting anomalies that may be obscured by bone structures.

While it is hard to know just how beneficial live imaging will be to treatment outcomes and reducing side effects as trials take years, the goal in all treatments is to get more dose to the cancer while better sparing healthy tissue, he added.

Dr. Lavin said ViewRay’s growing orders are testament to physician interest and the soon to be introduced linear accelerator option should boost sales as many centers prefer not to store radioactive cobalt.

“Our one question is how many centers will be willing to pay the meaningful pricing premium, but we feel the first 50-plus adopters will purchase quickly regardless of price and that will drive the stock the next few years,” he added.

“These high end systems come directly out of Varian, Elekta, and Accuray and we have a hard time believing these three players struggling for growth will leave ViewRay independent if it shows some sustained success,” Dr. Lavin said.