Thursday, February 8, 2007

IPO Spotlight - Accuray Incorporated

An Initial Public Offering (IPO) often generates a lot of attention from Wall Street. However, picking out the winners amongst the losers can be a daunting task. After all, most of the financial information held by private companies is in fact private and thus, not accessible by the public. Despite this difficulty, information on these newly public companies regarding their products, customer base, market share and corporate intentions are readily accessible through a little search engine called Google.

Even with this information it can still be difficult to anticipate how the company's stock will react once public, i.e. there is no chart marked with previous battles between bulls and bears. However, anyone with the power of observation can recognize the inherent sexiness of a newly public company. What product does the company sell? If its a new product what type of market can or does exist for it. If its a developmental state company, realistically how close are they to the commercialization stage?

MindRay Medical International (MR) a Chinese based
developer, manufacture, and marketer of

diagnostic medical equipment, patient monitoring devices and ultrasound imaging systems is up over 90% since October 2006. The success of MindRay and other medical device companies like China Medical Technologies Inc. (CMED) indicates strong demand for the stocks within this industry.

In America, where we are privy to the the world's finest medicine, demand for modern health care will continue to surge as America's largest generation, the Baby Boomers continue to age. Companies which supply medical facilities with technology capable of improving the effectiveness of existing treatment or decrease the mortality rate of difficult to cure pathologies should thrive as hospitals and clinics expand and revamp existing facilities and equipment to accommodate for the rising demand of health care.

Scheming the IPO calender early last week I came across a company which sparked my interest. Accuray Incorporated (ARAY), a Sunnyvale California based developer and manufacture of CyberKnife a robotic radiosurgery device, according to the companies website, "Is the worlds first and only commercially available intelligent robotic radiosurgery system designed to treat tumors anywhere in the body." The company boasts sub-millimeter accuracy as well as eliminating the need for invasive frames used to stabilize patients during traditional radiosurgery systems. The device received FDA clearance in 2001 to treat tumors anywhere in the body and approval in China to treat tumors of the head and neck in 2005. To date they have sold 140 CyberKnife systems and have provided treatment to 20,000 patients throughout the world.

Among other notable mile stones, the company signed an agreement with Siemens AG (SI), "To collaborate in the development of advanced imaging and software solutions targeted for use in both radiosurgery and radiotherapy." The companies will jointly work towards the integration of Siemens computed tomography(CT) system with the CyberKnife as well as to integrate Accuray's targeting techniques into Siemens radiotherapy product line. Given that Siemens is one of the worlds largest supplier of medical devices with sales of 7.6 billion, for fiscal 2005 this contract bodes well for the future prospects of Accuray. Not to mention they are flush with $288 million in cash from their wildly successful IPO today. For the 9 months ended September 30th, the company reported a net of $2 million on revenue of $33 million, compared to a loss $10.2 million on revenue of $4 million a year ago.


b_ballyn11 said...

Sweet write-up dude! So how did you fair out in the market with them today?!

Ambient Insight said...

Still opening move like ARAY did today is very bullish. Opened at 21 moved to 28.50 and then closed near the daily high. Still long and strong.