Shares of ViewRay (Nasdaq:VRAY), a medical technology firm that manufactures advanced magnetic resonance imaging solutions, have enjoyed an amazing 12 months and are set to climb once again as analysts from Japanese firm Mizuho started their coverage of this promising company.

As of September 14, VRAY stock had appreciated by more than 81 percent on a year-over-year basis. Prior to the start of the trading week, VRAY already had jumped 16.54 percent to finish a 30-day run that saw shares climb by 11.25 percent. A lot of this share appreciation has come from positive fundamentals as well as from technical analysts acting upon opportunistic signals. But the most important factor driving VRAY forward is the recommendation by Mizuho.

The MRIdian Promise

As a respected securities and financial analysis firm, Mizuho's "Buy" rating and its assigned target price of $12 comes at a great time for investors following the progress of ViewRay as a leading MRI technology company. ViewRay is based in Ohio. Its main product is MRIdian, a system that is capable of providing oncology diagnostics and performing treatment simultaneously. The combination of imaging equipment and advanced software allows healthcare professionals using MRIdian to target cancerous growths accurately and deliver prescribed doses of radiation at the same time they obtain diagnostics.

We covered VRAY and its MRIdian technology in recent articles here and here. 

MRIdian has been reviewed positively by physicians and medical scientists in the fields of oncology and diagnostic imaging. Being able to obtain high-resolution images while targeting tumors with radiation is an interesting proposal for doctors since they have less to worry about in terms of exposing healthy tissue to unwanted radiation doses. MRIdian focuses on accuracy, thereby lowering the harmful side effects of radiation.

Revenue Growth for ViewRay

Although the company did not sell MRIdian units during the second quarter of 2017, the company's projected revenue growth figures were very promising. ViewRay has been cleared to conduct marketing operations in Canada, and the company currently has an order backlog valued at about $180 million for two systems: the MRIdian Cobalt and the Linac. Three Asian countries are awaiting systems along with six European nations. Orders also are pending in the United Arab Emirates.

ViewRay's operating expenses were less than $13 million during the second quarter, and the company finished the reporting period with $54 million in cash. ViewRay's directors expect to sell seven or eight MRIdian systems over the next six months to effectively increase their annual revenue by more than 100 percent compared to 2016. The key is to have enough funds available to research methods to speed up their manufacturing, implementation, testing, and calibration processes. At this time, completing the delivery and installation of a MRIdian takes three months. ViewRay would like to cut this time down by one month.

Currently, VRAY has guided to $45-50mm revenue for the year (7-8 MRIdian linacs). The company expects to see revenue booked in the back half of the year as installations are completed and patients begin to be treated.

VRAY Investor Action

Counting Mizuho, there are now four securities analysts covering VRAY, and all four have issued "Buy" ratings for the company as of September 11. Northland Capital, BTIG Research and Cantor Fitzgerald have all decided to upgrade their ratings to "Buy" following the Q2 report and the marketing approval news coming from Canada.

With all this good news for VRAY, which is performing better than the S&P 500 by a margin of 18 percent, investors are showing their love with healthy daily trading volumes. VRAY rallies already have been experienced in August, and the same can be expected during September and over the next few weeks. 

In early September, Russell Investments Group announced that it had moved to increase its VRAY holdings by $1.36 million. This move prompted other investment banking firms to also acquire more VRAY shares. This has been the case with UBS Group, which now holds nearly 22,500 shares. As of the trading week starting on September 11, almost 54 percent of VRAY shares were held by institutional investors. 

The 52-week trading range for VRAY is between $2.64 and $10.39. This puts the $12 price target set by Mizuho in an interesting light. The Monday trading session started with VRAY up by almost one percentage point as Wall Street investors seemed upbeat by news about Hurricane Irma having been less destructive than expected in Florida. On September 6, VRAY had been trading around $5.5. On September 11, shares opened at $6.3. 

Technical analysis traders also are paying attention to VRAY as its Average True Range indicator is hovering around 0.29, which may signal a reversal in stock price amidst volatility.

VRAY System in Use at Henry Ford Hospital

VRAY's MRIdian already is in use at Henry Ford Hospital and the initial results have been positive. The hospital started using the technology on a select type of cancers to test it out, and have already spread the use out to the rest of their patients because of the imaging results. The technology allows doctors to see tumor movement during treatment and adapted treatment multiple times for the same patient.

Conclusion

We continue to believe that VRAY is a strong company and an attractive investment for investors during the remainder of 2017.

We recommend that risk-tolerant investors consider snapping up shares in the wake of Mizuho's initiation of coverage, early success at Henry Ford Hospital and the company's overall potential.