Going by the preliminary results,
) expects to report revenues of $102.5 million for the fourth
quarter of fiscal 2012, up 10% year over year (up 12% at constant
exchange rate or CER). However, the result is expected to fall
short of the Zacks Consensus Estimate of $106 million. This will
result in total revenue of $381.9 million for the fiscal year, up
11% year over year (up 12% at CER), marginally ahead of the Zacks
Consensus Estimate of $380 million but within the company's
guided range of $380-$384 million.
Volcano Corporation reported preliminary results ahead of its
presentation at the J P Morgan Healthcare conference, held
yesterday. The company will come up with the complete results
along with the guidance for 2013 in late February.
Revenues in the Medical segment increased 10% (up 12% at CER)
during the quarter on the back of a robust 42% increase (up 45%
at CER) in FFR (Fractional Flow Reserve) disposable business
along with growth across all the key operating regions. Also, the
medical disposable business showed encouraging performance with
an 11% increase at CER reflecting the value of functional
percutaneous interventional (PCI) market development strategies.
The Industrial segment recorded revenues of $2.5 million in the
fourth quarter, up 63% year over year.
The company is confident about the potential of the
intravascular ultrasound (IVUS) and FM (functional measurement)
markets based on some favorable trends in the industry in the
form of greater clinical and economic pressure to prove the
benefits of PCI procedures. By the middle of the decade, the
penetration rate of integrated consoles in cath labs is expected
to reach 80% or more from the current level of just over 30%.
Banking on its ability to reduce costs and continuously upgrade
technology, the company is confident of reaping maximum advantage
from this lucrative market. Volcano expects its core IVUS and FM
businesses to grow over 20% annually coupled with additional
revenues from its product pipeline.
Besides, Volcano Corporation has a strong portfolio, which
should ensure growth over the long term. Further, pipeline
development is also progressing. Based on its direct sales
program, the company is growing its market share in Japan at a
fast pace and approaching 50% share in this region. Given the
termination of several distribution agreements over the past few
years, the company is now well placed to address 100% of the
business in Japan on a direct basis. Japan continues to be an
important IVUS growth opportunity for the company, despite the
high penetration level of nearly 80%.
However, capital spending by hospitals has been affected by
the weak economy. This has affected PCI volumes in the U.S.,
Europe and Japan resulting in slower growth of the IVUS
disposable business in the recent past. Moreover, unfavorable
currency movement continues to be a major headwind for the
company. Volcano faces tough competition from
Boston Scientific Corporation
) for the IVUS range of products.
We have a Neutral recommendation on Volcano Corporation. The
stock retains a Zacks Rank #3 (Hold).
BOSTON SCIENTIF (BSX): Free Stock Analysis
VOLCANO CORP (VOLC): Free Stock Analysis
To read this article on Zacks.com click here.