) lost 7.5% as it released a disappointing fiscal 2014 guidance
along with its preliminary result for the fourth quarter of 2013
yesterday. This precision-guided therapy tools provider for the
diagnosis and treatment of coronary and peripheral vascular
disease is slated to release its exhaustive fourth-quarter and
fiscal 2013 results in late February.
A Look at Elementary Results for Q4
For the fourth quarter, Volcano estimates revenues of about
$103.3 million, 1% higher (up 6% at constant exchange rate or
CER) than the year-ago revenues of $102.5 million, but in line
with the current Zacks Consensus Estimate. For full year 2013,
revenues are likely to amount to $393.7 million, up 3% (up 8% at
CER) from the year-ago figure. This preliminary fiscal number
remained marginally ahead of the Zacks Consensus Estimate and was
within the company-provided guidance.
Quarterly growth was led by a solid 15% increase in disposable
revenues from peripheral IVUS (Intravascular Imaging) accompanied
by share gain through penetration of the peripheral market and a
great start with PioneerPlus Reentry catheter. Moreover, IVUS and
FFR (Fractional Flow Reserve) businesses flourished well with a
20% increase in European revenues.
However, these improvements were offset by lower-than-expected
growth in FM business in the U.S. and Japan. Further, the ongoing
weakness of the yen continued to affect the company's business in
Japan. In the quarter, currency headwind impacted IVUS and
Functional Measurement (FM) revenues by 25%.
Revenues in the Medical segment increased 1% (up 6% at CER) in
the fourth quarter to $100.8 million, based on a robust 10% (at
CER) hike in FFR single-procedure disposable business along with
a 5% increase in intravascular ultrasound (IVUS) single-procedure
disposables.Total consoles sales remained unchanged year over
FFR disposable sales grew 4% at CER in the U.S., 16% in Europe
and 13% in Japan and a substantial 47% in Rest of the world. On
the other hand, console placement declined 12% in the U.S. and by
14% in Japan offset by 46% increase in Europe and 2% growth in
the Rest of world, compared with the year-ago quarter.
IVUS single-procedure disposables franchise revenues increased
15% in the U.S., 19% in Europe, 28% in the Rest of world and
declined 7% in Japan on a year-over-year basis. The Industrial
segment recorded revenues of $2.5 million in the quarter, down 2%
year over year.
According to the company, the U.S. business continued to be
impacted by a decline in PCI volumes. Moreover, despite growth in
FFR business in Japan, the company is not happy with the overall
performance in this region.
Volcano provided an updated fiscal 2014 guidance. For 2014,
Volcano declined its revenues expectation to the range of 4% to
6% on a reported basis and 6% to 8% at CER, much below the
earlier guided range of 9% to 11% on a reported basis and 8% to
10% at CER.
According to Volcano, this disappointing guidance reflects
moderate growth in worldwide FM market, a
greater-than-anticipated decline in PCI volumes in Japan and an
impact of 300 basis points from currency exchange rates versus
Earlier during the company's preliminary third-quarter 2013
earnings call, Volcano anticipated a 7.5% reduction in
reimbursement for all of the company's disposable products in
Japan to be effective second quarter of 2014 onwards. The Zacks
Consensus Estimate for 2014 revenues was $429 million.
Amid a challenging macro-economic scenario, Volcano posted its
preliminary result for the fourth quarter of 2013 along with a
dismal 2014 guidance. Reimbursement reduction in Japan and soft
PCI volume continues to pose challenges for the company going
Favorable industry trends should lend positive momentum to
Volcano. We are also encouraged by the FFR revenues which
increased across all geographic regions. While we are impressed
with the company's pipeline development program, weaker guidance
remains a major downside.
The stock currently carries a Zacks Rank #2 (Buy). Other
medical stocks worth considering include
). While both Cepheid and CryoLife carry a Zacks Rank #1 (Strong
Buy), AngioDynamics holds the same Zacks Rank as Volcano.
ANGIODYNAMICS (ANGO): Free Stock Analysis
CEPHEID INC (CPHD): Free Stock Analysis
CRYOLIFE INC (CRY): Free Stock Analysis
VOLCANO CORP (VOLC): Free Stock Analysis
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