4Q Results, Outlook Boost Volcano Shares Wednesday February 13, 6:46 pm ET Volcano Shares Jump on Positive Financial Results and Forecast for Continued Growth
NEW YORK (AP) -- Shares of Volcano Corp. jumped Wednesday after the medical device maker topped Wall Street's fourth-quarter profit expectations and analysts forecast continued growth. The stock rose $2.14, or 17.4 percent, to $14.45. Shares have traded between $10.55 and $23.10 over the last 52 weeks.
The company swung to a fourth-quarter loss, but beat Wall Street expectations after excluding charges for the CardioSpectra buyout. It also expects sales of its intravascular ultrasound, or IVUS, systems and disposable products to continue rising. The products are used to help diagnose and treat heart disease. J.P. Morgan analyst Michael Weinstein reaffirmed a "Overweight" rating, saying the results confirm that Volcano is poised for growth. "Beyond 2008 we see multiple sources of potential upside to our estimates as Volcano expands its product portfolio," he said in a note to investors. "By 2009 Volcano could add several new product categories to leverage its existing sales infrastructure." The addition of CardioSpectra is expected to fuel the company's plan for a new type of catheter, using a noninvasive imaging technique. Also, Volcano finished 2007 with about $187 million in cash and short-term investments, leaving the company well-positioned for more acquisitions. Meanwhile, IVUS system sales continue to grow, with the company placing 178 of the consoles during the fourth quarter, most in the U.S. Overall for 2007, the company saw a 30 percent increase in installed IVUS systems. Merriman Curhan Ford analyst Jose J. Haresco also maintained a positive outlook on the company, reaffirming a "Buy" rating. New product launches, relationships with drug-coated stent partners and its sales force will all help to drive growth over the next two years. "We believe Volcano's continued strong execution even in the face of decreasing PCI procedures speaks volumes about its growth potential," he said. PCI procedures, commonly called angioplasty, often involve the use of a stent to prop open a clogged artery. The procedures have been on the decline since possible safety issues arose last year over drug-coated stents. Haresco said the company's recently approved Revolution catheter and a partnership with Johnson & Johnson should help it take more market share from competitor Boston Scientific Corp.