On Jul 11, we issued an updated research report on
) - a leading precision guided therapy tools provider. The company
continues to maintain its leading position in the intravascular
ultrasound (IVUS) markets of U.S., Japan and Europe, translating
into a 50% hold of the global market share.However, the current
market scenario continues to remain challenging for Volcano.
The final reimbursement reduction in Japan resulted in an
approximate 5% decline in Imaging Disposables and around 2% cut in
fractional flow reserve (FFR) disposables of Volcano Corp. These
reimbursement cuts will be in effect for the next two years. In
addition, the Japanese government has mandated a 3% consumption tax
increase in addition to the reimbursement cuts. This has led to a
7.5% reimbursement decline beginning Apr 2014, in line with the
Amid a challenging macro-economic scenario, Volcano Corp. posted
a dismal first quarter of 2014 along with a dismal 2014 guidance.
The first-quarter adjusted net loss of $0.12 was 9.1% wider than
the Zacks Consensus Estimate and way below the year-ago reported
earnings of $0.02.Although, revenues climbed 4% year over year at
CER to $94.5 million, it missed the Zacks Consensus Estimate of $96
Volcano Corp. derives a major portion of its revenues from its
IVUS product portfolio which continues to demonstrate strong
growth. In the last reported quarter, the IVUS improvement was
buoyed by market share gains across Volcano Corp.'s key geographic
locations barring Japan, and over 20% growth in the U.S. peripheral
IVUS business. The company exhibited a solid 10% IVUS growth in
Europe and a 22% rise in Rest of the World.
Currently, more than 3.1 million procedures are performed
globally in this market which has an imaging penetration of less
than 3%.Given the low penetration rate, Volcano Corp. expects the
U.S. peripheral IVUS business to grow in the high teens over the
upcoming period. Also, FFR disposable revenues managed to show
healthy growth.We are also optimistic about the favorable industry
trends which should lend positive momentum to Volcano Corp.
The stock currently carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Some better-ranked stocks in the medical instrument sector that
look promising at the moment include
Intuitive Surgical, Inc.
). While MASI sports aZacks Rank #1 (Strong Buy), the other two
stocks carry a Zacks Rank #2 (Buy).
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VOLCANO CORP (VOLC): Free Stock Analysis Report
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