Going by the preliminary results,
Volcano Corporation
(
VOLC
) expects to report revenues of $92.7 million for the fourth
quarter of fiscal 2011 (representing a 14% increase year over
year), marginally falling short of the Zacks Consensus Estimate of
$93 million. This will result in total revenue of $343.5 million
for the fiscal year, up 17% year over year and at the mid-point of
the company's guidance of $342-$345 million.
Volcano Corporation reported preliminary results ahead of its
presentation at the J P Morgan Healthcare conference, scheduled for
today. The company will come up with complete results along with
guidance for 2012 in late February.
Revenues in the Medical segment increased 20% during the quarter
on the back of 37% growth in FFR (Fractional Flow Reserve)
disposable business and an in-line performance in the IVUS
(intravascular ultrasound) business. However, performance of the
Industrial segment remained challenging due to softness in telecom
infrastructure spending in key international geographies. This
resulted in a 70% year-over-year decline in Industrial revenues to
$1.5 million in the fourth quarter.
The company is confident about the market potential of the 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 (percutaneous interventional
) procedures. Besides, the company has a strong portfolio
which should ensure growth over the long term. The company has
strengthened its position as the IVUS market leader in the US,
Japan and Europe and continues to run in excess of 80% of system
placements in the US.
Volcano Corporation is keen on expanding its presence in Japan
through a direct sales program and introduction of new products. It
is heartening to note that the macro environment in Japan is
gradually picking up with procedure volume reverting to
pre-earthquake levels. The rollout of Vibe RX imaging balloon
catheter in Japan is currently ongoing with full market release
expected in early 2012. The recent transition of the distribution
agreement with
Johnson & Johnson
(
JNJ
) regarding Cordis would allow Volcano to address 100% of the
business on a direct basis. Over the long term, the company should
benefit from this move as Japan has the largest IVUS market in the
world.
However, capital spending by hospitals has been affected by the
weak economy. This has affected PCI volumes in US, Europe and Japan
resulting in a slower growth of the IVUS disposable business in the
most recent quarter. The stock carries a Zacks #4 Rank ("Sell") in
the short term. Over the long term, we maintain our Neutral
recommendation on Volcano Corporation.
JOHNSON & JOHNS (
JNJ
): Free Stock Analysis Report
VOLCANO CORP (
VOLC
): Free Stock Analysis Report
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