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Volcano Strengthens Portfolio - Analyst Blog

Posted: 3/15/2013 2:43:00 PM
Referenced Stocks: BSX;CAGR;CPTS;EW;VOLC

Recently, Volcano Corporation ( VOLC ) launched its Valet microcatheter in the U.S. and Europe. The company's latest offering is available in lengths of 100cm, 135cm and 150cm and sizes compatible with 0.014" and 0.035" guidewires. The launch of Valet microcatheter underlines Volcano's focus on precision guided therapy, mainly for the treatment of highly stenosed lesions.

During the first quarter of 2012, Volcano initiated a limited market release of its Valet microcatheter in the U.S. after gaining the U.S. Food and Drug Administration (FDA) 510(k) approval in Jan. This was followed by CE Mark approval in Europe for the device and a limited market release in Europe in the second quarter. The company is looking at a 2013 approval of Valet in Japan. We expect revenue contribution from Valet to improve gradually.

Valet microcatheter is the first product from Volcano to include its proprietary VeriTorque technology which lends the catheter a remarkable torque performance. The VeriTorque technology in conjunction with Valet's distal tip ensures efficient control and ease of positioning the microcatheter in tortuous and distal anatomy. As a result, Valet is a technically advanced microcatheter, especially useful for highly stenosed lesions.

Notably, pipeline development at Volcano is progressing well. The launch of Valet is aligned with the company's strategy of commercializing pipeline products. Further, Volcano plans to launch existing pipeline candidates like FL.IVUS, FL.ICE, Optical Coherence Tomography (OCT), CruxIVCF and Sync-Rx software modalities among others. According to the company, the total addressable market for its pipeline products exceeds $1.5 billion.

Volcano expects to post compound annual growth rate (CAGR) of 13% for its top line over the next five years. It asserts that commercialization of pipeline products should result in a higher-than-expected CAGR in the coming years.

On the tepid side, the company continues to battle softness in the European market. Volcano also faces tough competition for its IVUS range from Boston Scientific ( BSX ).

Volcano carries a Zacks Rank #3(Hold). Although we remain on the sidelines for this medical sector stock, we believe that other medical sector stocks such as Edwards Lifesciences ( EW ) and Conceptus ( CPTS ) warrant a look. These stocks carry a Zacks Rank #2 (Buy).

BOSTON SCIENTIF (BSX): Free Stock Analysis Report

CONCEPTUS INC (CPTS): Free Stock Analysis Report

EDWARDS LIFESCI (EW): Free Stock Analysis Report

VOLCANO CORP (VOLC): Free Stock Analysis Report

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